Jack D. Schwager: Losses
on Monday, August 8, 2011Jack D. Schwager Money Quotation saying Inability to accept small losses means that you will over-react to larger losses and may suffer complete devastation. Jack D. Schwager said:
“If you can’t take a small loss, sooner or later you will take the mother of all losses” — Jack D. Schwager
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In this quote, Jack D. Schwager is giving advice about risk management and losses. The best interpretation is:
- Schwager is saying that if someone is unable to accept or tolerate relatively minor losses as a normal part of investing or trading, they will eventually experience an enormous loss that they truly cannot afford.
- His point is that occasional, small losses are inevitable with any risky financial activity and should be seen as the cost of doing business.
- However, if one refuses to cut their losses at a manageable level, it can allow a small problem to cascade into an overwhelming loss that far exceeds what was intended or prudent to risk.
- Schwager’s message is that the inability to absorb or learn from modest losses sets traders up to be blindsided by a single massive loss that their capital cannot withstand.
The overall message is about the importance of having the discipline to accept small losses gracefully as a risk management strategy to prevent a situation where an investor is suddenly overwhelmed by a calamitous loss that causes severe financial harm. Schwager advocates for learning to minimize losses at any scale.