As Prospect Theory explains, humans hate losses than we like gains, by about twice as much…
The "Buy and Hold" narrative spewed by every asset-gatherer and commission-taker is perhaps far better understood as "buy and hold on tight" as the following chart shows, for many, equity exposure is simply inappropriate (or too scary)!
Simply put, it's not the 'volatility' that people see as risk… it's the drawdown, and as SocGen's chart above shows that drawdown is practically impossible to bear unless you are lucky, blind, or ignorant.
Add to that the fact that US valuations have seldom been more expensive…
In today's over-inflated, over-leveraged, over-manipulated markets, why on earth would a rational person not be prioritizing protecting their financial wealth?
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