so that relates to the utility of drawdowns vs upside return. the utility is usually asymmetric for most people. keep in mind when construct your portfolio
invest 90% and keep 10% cash? does it really work? maybe only with etf or high confidence asset. even so when market crush 50%, then your net worth down by 45% and you surely will start panic
MR Market constantly begs you to trade, but you dont have to trade with him. Your job is to take advantage of this drunken psycho, not to be taken advantage of
MR MARKET: drunken psycho. Some days he gets very enthused, some days he gets very depressed. When he gets enthused, you sell to him, and when he gets depressed, you buy from him. There's no moral taint attached to that
what happens when your portfolio down 20% and you worry you will lose the rest? never invest 100%. invest probably less than 50% and if things drop, dont add to it but just change the beta