Have you ever lost a lot of money because you refused to cut your losses? The truth is right here in this chart! The most dangerous reference point in investing isn’t the market price, it’s that spot in your heart where you “refuse to admit you’ve already lost.” This might flip your perspective: Prospect theory rewrites “humans are profit-seeking creatures” into “humans are reference-point-guarding creatures.” Many times, we think we’re chasing profits, but we’re actually just protecting our self-narrative. Small gains? Cash out. Big losses? Hold on for dear life. Risk-averse when profiting, risk-seeking when losing. Ever wondered why this happens? So, the most dangerous reference point in investing isn’t the market price, but that spot in your heart where you “refuse to admit you’ve already lost.” For example, we often double down to break even, or treat the all-time high as the money we were “supposed to have.” Sunk costs shouldn’t dictate major decisions. If we set aside the narrative, the approach should be: Don’t guard costs, guard your system. Don’t aim to break even, aim for compound growth. Don’t prove yourself, protect your ability to place the next bet.