Friend of mine borrowed a fair sum of $$ from the banks in the march 2020 covid crash. Even took on leverage.
Best time to buy stocks, he said.
He even built a financial model on excel to understand his downside.
No issue.
But a few weeks later, he sold them all.
Why?
Best time to buy stocks, he said.
He even built a financial model on excel to understand his downside.
No issue.
But a few weeks later, he sold them all.
Why?
He told me:
“When the 2nd circuit breaker hit and the market fell further, I took a double look at my excel model.
I could still take further drawdowns and be ok.
But when I picked my 5 year old daughter up from school that day, I started to panic...
“When the 2nd circuit breaker hit and the market fell further, I took a double look at my excel model.
I could still take further drawdowns and be ok.
But when I picked my 5 year old daughter up from school that day, I started to panic...
“Am I making the right decision, I wondered?
What if something happens that I didn’t expect?
I wouldn’t be able to give her the life I promised I would. “
Few days later, he sold all his stocks.
What if something happens that I didn’t expect?
I wouldn’t be able to give her the life I promised I would. “
Few days later, he sold all his stocks.
Lesson:
We’re not an excel spreadsheet.
We often underestimate the psychology side of investing, even if the numbers make sense.
We make financial decisions at the dinner table, not in front of a screen.
Remember that.
We’re not an excel spreadsheet.
We often underestimate the psychology side of investing, even if the numbers make sense.
We make financial decisions at the dinner table, not in front of a screen.
Remember that.
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