If you look at this index, which is Nikkei 225, which represents the Japan economy. Can you imagine this? Japan, since 1989, it’s Nikkei 225 index has been trending lower, all the way to about 2015 at that point in time. That is about more than 25 years. Can you imagine averaging down on Japan, which is also one of the economy power of the world, that has famous brands like Honda, Toyota, and Sony.
And at the end of the 25 years, averaging down on the major equity index, you are still seeing losses. How many 25 years do you have in your investing lifetime to average down on such economic superpower and still losing money or having paper loss at the end of the 25 years? Right, this is something to think about.
Yes, ultimately, the index or the country will not go bankrupt, but you can never imagine how long it might take for you to finally see your returns if you just simply blindly averaged down on an index or an individual stock like that.
My point to you in this particular example here is this, never be so blindly in love with someone undeserving that you totally overlook on the most desirable person who walked past you time and again.
Again, if you go back to the example of the stocks, the most important thing is when you decide to enter a trade, it must be because that this trade is telling you that you will likely, not saying definitely, but likely starts to generate you returns very quickly from here onwards. And this is how you can best minimize your opportunity costs and maximize the returns on your capital that is being put into this particular trade.
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