Chapter 14. Betting the Bank
Throwing good money after bad refers to a natural tendency for people to risk additional money to recover money lost. After losing some money (bad money), you may be tempted to increase your stakes by investing more money (good money) in an attempt to break even. Additionally, you may be tempted to increase the level of risk you take in order to make up losses faster. Indeed, as losses mount, some investors continue to escalate their commitment until they have essentially “bet the bank.” For individual investors, this means that they have risked a substantial amount of their wealth in an attempt to earn back their losses. For professional investors, they may end up literally betting the bank. The stories in this chapter ...
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