There are only four investment outcomes and three of them are good. They include: (a) a big gain, (b) a small gain, (c) a small loss, and (d) a big loss.
Everyone likes gains. The bigger, the better. Yet a small loss is tremendously beneficial as well.
Taking a small loss allows an investor to select a more productive asset. It also offsets taxable gains in brokerage accounts.
However, the most important reason a small loss is so powerful is that it prevents a titanic loss. The big loss is the only bad investment outcome.
Think about it. If you could minimize the bulk of bear market meltdowns, wouldn’t you?
Pacific Park Financial refrains from swinging for home run picks. Instead, we employ a tactical approach to asset allocation as well as risk management. The process seeks to reduce risk associated with bearish catastrophes.
If you would like additional insight into the mathematical, financial, and psychological benefits of diminishing big losses, please visit our Resources page for our Special Report.