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Episode 258: Prof. Meir Statman: Financial Decisions for Normal People

The Rational Reminder Podcast

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The Importance of Realizing Losses

For many people realized losses are the same as real losses so if you have a paper loss it is not really a loss there would say now you can't miss say this is stupid don't you understand. If you bought a start for 100 and now it is trading at 50 you have lost 50 dollars whether you have realized that loss or not. Now hindsight is telling you god wasn't it clear that this stock is a loser and so on but of course it was not clear  now rationally speaking you should realize your losses because you get tax benefits from realizing losses whereas you don't have them in paper losses.

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