|Importance of Principal Preservation|
Gain to Break Even
So a 10% loss only requires an 11% gain to break even, which is doable. However, as losses grow, the gain needed to break even grow even faster. For example a 30% loss requires a 43% gain to recover the loss. When there is a 50% loss, a 100% gain is needed, which is extremely difficult to do.
That's why it's important to minimize losses. Big declines require prohibitively large gains to recover what was lost.
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This is not financial advice. Please consult a professional advisor.
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