But, of course, your net worth had really changed. If you'd sold out before the dip, you'd have had lots more money. Now it's gone. And yet, your right. It's not like losing a tangible thing.Did I think it was the same thing as permanently losing a physical item? Of course not. But, again, he knew I wasn't using the term "lost" in the literal, forever sense.
That's the thing. The loss of a much smaller amount of money in "real life" hurts more than a bigger reduction in the relatively abstract portfolio balance.I know I feel the hurt from a lost $1-2 from a price mistake at the grocery checkout counter or losing $5-10 from letting an offer expire or misplacing a gift card. If I don't focus on actively forgetting those losses and putting them in context, they can bug me, maybe even the next day.
Today's $25k+ loss in the market? Pssshhhh... It goes up and it goes down.
It would make me cranky (and I think we've all been there--stocks go on sale shortly after a big purchase). And there's no doubt I'll always own 50% fewer shares than if my letter had been later, which stings But, for whatever reason, it doesn't feel like I "lost" the difference in share value, at least not in the same way as if I'd actually burned the currency.Well, look at it this way. If you mailed in a check to buy $50,000 of stock and then it dropped 50% right after your purchase, would you call it a paper loss if your friend also mailed in $50,000 for the same stock but was delayed because not enough postage on the envelope? I mean, hey, you still have the same shares...but your friend has twice as many now.
Between the "abstractness" of account balances and their incessant ups and downs, it's just hard to fixate on a particular point in time and feel that I "lost" money.
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