Subject: Re: OT: so you want an index
As so many investors losing money creates a huge psychological problem for me. I know me well enough that I am extremely unwilling to sell stuff with a loss.

Yeah, that is a problem. A big behavioral problem.

Funny, I am the exact opposite. When I am looking to sell something to raise cash or whatever, I prefer to sell something that is showing a loss.

Actually, the way to avoid that behavioral problem is to just invest in an index fund.

"You should be concerned about portfolio results, not position results."


"Markowitz long ago told investors that the primary focus should be on designing and managing the portfolio. That’s a message that still resonates and it reminds us not to obsess over the parts."

"you are generally best off if you cut your losses and let your winners run. "

"The irregularity of the markets exists to shake out market players that cannot handle losses. Those that cannot handle losses had unrealistic expectations. Markets are perverse, and they suck in amateurs near peaks, and the amateurs leave near troughs. They help provide the excess performance of the best."


========================================

"Risk control is the best route to loss avoidance. Risk avoidance, on the other hand, is likely to lead to return avoidance as well." -- Howard Marks

Better to sell at a 10% loss than to hang on through a 30% or 40% loss.

One way to do simple risk control is to mechanically follow a timing rule. There are regular posts here ("Recent BCC Signals") on one set.

A simple 10 or 12 month Simple Moving Average of the S&P500 is a well-known and readily available timing signal which will let you avoid most large bear markets.
This is simple to calculate on your own, or there are plenty of web sites that publish it. For example: https://www.advisorperspective...