THINKING ABOUT LOSSES?

"Individuals regret losses more than they welcome gains of the exact same size - two to two and one-half times more."  Robert Hagstrom

"Large permanent losses can dampen the confidence of an investor - and I sternly believe that a good investor needs to be highly confident about his ability to make decisions, because investment decisions seldom are clear and usually are muddled with uncertainties and unknowns" Ed Wachenheim

"Even the most conservative investors can be paralysed by large losses, whether due to mistakes, premature judgements, or the effects of leverage.  If losses impair your future decision making, then the cost of a mistake is not just the loss from that investment alone, but the impact that loss may have on the future chain of events.  If a loss freezes you from taking full advantage of a great opportunity, or pressures you to make it a smaller position than it should or would otherwise be, then the cost may be far greater than the initial loss itself" Seth Klarman

"Large losses, though initially only on paper, often derail an otherwise rational investor. An illogical fear of loss insidiously exerts an undue influence on portfolio decision making. (Rationally, the lower prices go, ceteris paribus, the less the likelihood of further loss—a truism that falls on deaf ears when fear has the upper hand.)" Frank Martin

"Even if one has great confidence in a position, which then declines substantially, the process by which a loss is experienced is always so unnerving and detrimental that the position is a victim of the decline itself.  Price creates its own reality."  Michael Steinhardt

“Soros is the best loss taker I’ve ever seen. He doesn’t care whether he wins or loses on a trade. If a trade doesn’t work, he’s confident enough about his ability to win on other trades that he can easily walk away from the position. There are a lot of shoes on the shelf; wear only the ones that fit. If you’re extremely confident, taking a loss doesn’t bother you” Stanley Druckenmiller

“I always take my losses quickly. That is probably the key to my success. You can always put the trade back on, but if you go flat, you see things differently” Marty Schwartz

"I learned early in my career to be skeptical and flexible, not stubborn about a stock.  I also learned to take quick, small losses rather than get emotionally involved in a stock that was dragging me down.  When I am wrong about a security, I try to take my loss at the 10% level" Roy Neuberger

"I don't have any tolerance for trading losses. I hate losing money more than anything. Losing money is what kills you. It's not the actual loss. It's the fact that it messes up with your psychology. You lose the bullets in your gun. What happens is you put on a stupid trade, lose $20m in ten minutes, and take the trade off. You feel like an idiot, and you’re not in the mood to put on anything else. Then the elephant walks past you while your gun's not loaded. It's amazing how annoyingly often that happens. In this game, you want to be there when the great trade comes along. It's the 80/20 rule of life. In trading, 80% of your profits come from 20% of your ideas". Michael Platt

"A good rule to remember is that people who are threatened with big losses and have a chance to break even will be unusually willing to take risks, even if they are normally quite risk averse. Watch out!" Richard Thaler

“A person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise” Daniel Kahneman

“One of the things I think has really made us good is that we have not just done very well picking stocks, but we've done a great job of avoiding losers.” James Dinan

"We have designed our risk-limitation techniques with the goal of limiting losses to manageable amounts in the event of a severe downturn in stock and/or bond prices."  Paul Singer

“Perhaps our profession is not unlike amateur tennis: It’s usually not the number of winners hit but the number of unforced errors, that determine the outcome” Frank Martin

“Successful investing is not just about achieving stellar returns, it is also about avoiding loss” Jean Marie-Eveillard

Avoiding loss is the most important prerequisite to investment success” Seth Klarman

"Some of the best investment decisions in my career have been acts of omission – avoiding those securities, industry sectors, and asset classes that we believed offered a poor risk versus reward... Winning by not losing means to focus on both commission and omission – that is, both what you put in your portfolio and what you don’t. " Steven Romick

“George Soros has the least regret of anyone I have ever met. Even though he will sometimes play up to his public image as a guru who knows what is going on, it is in no sense what he does as a money manager. He has no emotional attachment to an idea. When a trade is wrong, he will just cut it, move on, and do something else” Colm O’Shea

“We prioritize the avoidance of catastrophic loss first and foremost and focus on potential gains second.” Zeke Ashton

"What I am trying to do is find trades that won’t lose much money even if I am wrong”  Colm O’Shea

“Profits always take care of themselves, but losses never do.  The speculator has to insure himself against considerable loss by taking the first small loss” Jesse Livermore

“Sometimes in life, it’s not just about what we buy, but what we don’t buy.” Jean Marie-Eveillard

“In my book, trying to avoid losses is more important than striving for great investment success” Howard Marks

“The key to beating the indices is to minimize the loss of capital in investments” Mohnish Pabrai

 “You rarely, if ever, make money from worrying; it does not typically enhance return. But by avoiding loss, you are able to hang on to what you have accumulated, which is a cornerstone of successful investing” Seth Klarman

 “The key to beating the indices is to minimize loss of capital in investments” Mohnish Pabrai

 “The elements of good trading are (1) cutting losses (2) cutting losses and (3) cutting losses. If you can follow these three rules, you may have a chance.” Ed Seykota

"Remember that to make a success your profits must be always greater than your losses, and your rule must be to cut losses short and let your profits run"  William D Gann

"Willingness to take small losses in some stocks and to let profits grow bigger and bigger in the more promising stocks is a sign of good investment management.  Taking small profits in good investments and letting losses grow in bad ones is a sign of abominable investment judgement"  Phil Fisher

"Selling quickly our losers and holding on to our winners is a constructive way to manage portfolios. Doing the other way around is the equivalent – to use Peter Lynch’s words – of removing the flowers and watering the weeds." Francois Rochon

"If you have to take a loss do it decisively - don't dither.  Learn the lessons and then forget about it" Peter Cundill

"In investing it is really important to avoid those losses that erase three or four years’ worth of compounding" Zeke Ashton

"In the stock market the first loss is usually the smallest.  One of the worst mistakes anyone can make is to hold on blindly and refuse to admit that his judgement has been wrong.  Many a novice will sell something he has a profit in to protect something in which he has a loss.  Since the good stock usually has gone down the least, or may even show a profit, it is psychologically easier to let go.  With a bad stock the loss is likely to be heavy and the impulse is to hold on to it in order to recover what has been lost.  Actually, the procedure one should follow is to sell the bad stock and keep the good stock.  With rare exceptions, stocks are high because they are good, and stocks are low because they are of doubtful value" Bernard Baruch

"When the market goes against you, you hope that every day will be the last day – and you lose more than you should had you not listened to hope. And when the market goes your way, you become fearful that the next day will take away your profit and you get out – too soon. The successful trader has to fight these two deep-seated instincts." Jesse Livermore

"The investor and trader must work out his own salvation and blame himself and no one else for his losses, for unless he does, he will never be able to correct his weaknesses.  After all, it is your own acts that cause your losses, because you did the buying and the selling.  You must look for the trouble within and correct it.  Then you will make a success and not before"  William D Gann

"I like to repeat to myself a rule of Philip Carret, written some 86 years ago: 'Be quick to take losses and reluctant to take profits'." Francois Rochon