🔍 Why is Recovering Investments After Significant Losses So Challenging?

Let's break it down:

- 📉 Small Loss Example:

- If you lose 3%, you need a 3.09% gain to break even.

- Example: Start with ¥100,000. Lose 3%, balance drops to ¥97,000. To recover, you need a 3.09% gain on ¥97,000 to get back to ¥100,000.

- 🚨 Large Loss Example:

- If you lose 30%, you need a 42.87% gain to recover.

- Example: Start with ¥100,000. Lose 30%, balance falls to ¥70,000. To recover, you need a 42.87% gain on ¥70,000 to get back to ¥100,000.

- ⏳ Recovery Takes Time:

- Larger losses require significantly higher gains, which are harder to achieve.

- The recovery relies on rare, strong market conditions, making it even more challenging.

🔑 Key Takeaway:

Understanding these dynamics is crucial for making informed investment decisions and effectively managing risks.

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