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The
math of percentages shows that as losses get larger, the return necessary to
recover to break-even increases at a much faster rate.
A loss of 10 percent necessitates an 11 percent
gain to recover. Increase that loss to 90 percent and it takes a 900 percent
gain to get back to break-even.
Timing the market is unreliable and hard to successfully execute regularly.
Diversification is important and also capital preservation. Always try to avoid big losses.
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