Loss Aversion

View Financial Glossary Index


The tendency to feel an investment loss more intensely than one feels a commensurate investment gain. One of a group of Behavioral Financial Biases that can cloud investors’ judgment. Loss Aversion can distort an investor’s behavior in a number of ways: causing undue caution and thus limiting returns; and failing to appreciate what are actually substantial gains. The characteristic is magnified in older individuals, those in or near retirement, and they may feel a loss ten times more than they feel a commensurate gain.

If they can’t be educated to more evenly feel losses and gains, investments may need to be structured to avoid substantial losses.

Which Would You Feel More Intently?

MSFT Chart

MSFT data by YCharts

Are you an investing professional?

Click here to request a live demo of YCharts Professional, our premium suite of tools and data.
Learn more about our professional products. Call (866) 965-7552 or email sales@ycharts.com




Please note that this feature is only available as an add-on to YCharts subscriptions.

Please note that this feature requires full activation of your account and is not permitted during the free trial period.

Start My Free Trial {{root.upsell.info.call_to_action}} No credit card required.

Already a subscriber? Sign in.