Volatility is the toll we pay to access equity returns. The pros don’t feel less fear—they pre‑commit to a process that competes with fear and wins often enough.
Why Holding Is Hard
- Loss aversion: Losses sting ~2–3× more than equivalent gains.
- Myopic loss aversion: Checking too often magnifies the pain.
- Recency & availability bias: The last 48 hours feel like the future.
- Herding & narrative fallacy: Headlines sell emotion, not process.
Volatility ≠ Risk
Volatility is the path; risk is a permanent impairment of capital. If your time horizon outruns the drawdown and the business stays sound, volatility is rent, not ruin. Match liquidity to horizon—money needed within 12–24 months doesn’t belong in high-beta names.
The Three P’s Framework
- Plan: Write a one‑page thesis per holding; define what would invalidate it.
- Process: Automate contributions; rebalance on a schedule or bands.
- Protections: Position size so a single mistake can’t wreck you; use stops where appropriate.
Practical Drills
- Pre‑mortem: “It’s 12 months later and this position lost 30%. Why?” List three plausible reasons. Mitigate or walk away.
- Panic Playcard: Pre‑commit actions for big down days (e.g., if index falls 5% intraday, review theses after close; add only at pre‑set buy zones).
More Readings
Disclaimer: The information provided on this website is for educational and informational purposes only and should not be considered financial, investment, or legal advice. Stock markets, real estate, and other financial instruments involve significant risks, and past performance does not guarantee future results. You should conduct your own research and/or seek advice from a licensed financial advisor before making any investment decisions. The website owner is not liable for any financial losses or damages arising from the use of the information presented here.
About The Author
