Discover & Learn

Today, I want to talk about Prospect Theory and my life around this theory! In the world of investing, prospect theory suggests that we might sell a winning investment too quickly out of fear of losing our gains or hold onto a losing stock for too long because we don’t want to "lock in" a loss. The theory suggests that it's not always about what makes the most sense on paper; it’s about how we feel about our money the risks we’re willing to take. .In the world of investment, this asymmetry is known as loss aversion When I was in middle and high school, I was a bit chubby. Body shaming was not a known word at that time. I was regularly bullied on how "different" I look from the girl sitting next to me in class. My attempts to be a part of any sports, hence was always clouded by this "Prospect Theory". Such a big girl, can never compete in any sports, was the general idea. I never started to run long races until I was in my 40s. And here I am, posing with a Finisher's Medal at a Marathon race! I have run a full marathon of 42.2 Kilometers or 26.2 miles. I have tasted the sweet success of finishing the race and be the elite 3% of the entire world population, who finished a Marathon. Only, that I was a late participant in the game. That fear of "I am a big girl, hence I will not complete the race" was a big example of Loss aversion. My Twin sister on the other hand has a different version of the same theory. She taught me to do divisions in Kindergarten. She loved to read Comic books, enjoy nature, take a sneak peek at birds building nests and was least interest in academics. She barely passed her exams in junior and high school. She never even attempted to look at her own strength, because she was scared to look past her fear of examinations. Today she is holds a PhD degree and teaches Law at a reputed school. She recently wrote an article saying "Pain of losing feels worse than the joy of winning". Both my twin and I have taken a solemn oath to help people look further, beyond the fear of loss aversion. When you look past your fear, remember, the joy of winning is always ever lasting.