Would You Choose the Rollercoaster or the Hills?
Same return. 🎢 Very different ride. Which would you stick with?
🎯 Setting the Stage
Imagine it’s January 1st, and you invest $100,000 into a diversified portfolio. You’re committed to staying the course for three years — no jumping in or out, no making tweaks. Just letting the market do its thing.
Now, you’re shown two hypothetical return paths your investment might follow:
- Option A
- Year 1 = +12.0%
- Year 2 = -21.4%
- Year 3 = +25.0%
- Final Portfolio Value = $110,000
- Option B
- Year 1 = +7.0%
- Year 2 = -5.7%
- Year 3 = +9.0%
- Final Portfolio Value = $110,000
🔍 The twist? Both paths lead to the same ending value. But the ride to get there feels very different.
🤔 So, Which Path Would You Choose? Let’s pause here. If you’re like most people, Option B probably looks more attractive. It’s more consistent. Less gut-wrenching. It feels safer. But the question isn’t just which path looks better — it’s which one you’d be able to stick with.
The investor’s chief problem — and even his worst enemy — is likely to be himself."
— Benjamin Graham
Behavioral Finance 101: The Pain of Loss
Here’s what psychology tells us:
Losses hurt about twice as much as gains feel good.
That means the -21.4% drop in Year 2 of Option A could feel catastrophic — even if the portfolio recovers nicely the following year.
In fact, studies show that when investors see large losses in their portfolios, they’re more likely to panic sell, abandon their plan, or “go to cash” — locking in losses and missing the upside.
Emotional Decisions = Real Financial Consequences
Even though Option A ended at the same place, many investors wouldn’t have made it to the finish line.
They would’ve jumped off the rollercoaster after Year 2…
…and missed the 25% rally in Year 3.
That’s the hidden cost of emotionally driven investing:
It’s not just about missing returns — it’s about eroding trust in your plan.
Real-World Parallel: Market Volatility Happens
Let’s not pretend volatility is just a theoretical risk.
Here are a few recent examples:
- 2020 (COVID Crash): Markets dropped ~34% in a single month. Many bailed. Those who stayed in saw double-digit returns by year-end.
- 2008 Financial Crisis: Steep losses led many investors to abandon equities for years… and miss one of the strongest bull markets in history.
- Tech Bubble, 2000-2002: Many swore off stocks altogether, just before the next big run.
History has shown time and time again that those who stay invested tend to outperform those who try to time the market — even when the journey is uncomfortable.
So What’s the Point?
This thought exercise isn’t about picking the “better” portfolio.
It’s about recognizing that risk isn’t just numbers — it’s how it makes you feel.
✅ The best portfolio isn’t the one with the highest return.
✅ It’s the one you can stay committed to, even when the ride gets bumpy.
Building a Portfolio You Can Stick With
This thought exercise isn’t about picking the “better” portfolio.
It’s about recognizing that risk isn’t just numbers — it’s how it makes you feel.
✅ The best portfolio isn’t the one with the highest return.
✅ It’s the one you can stay committed to, even when the ride gets bumpy.
Building a Portfolio You Can Stick With
At Bilyk Financial, we design portfolios with this key idea in mind:
“Performance is only good if it’s achievable for the investor.”
That means understanding not just your goals, but also your behavior, your comfort level with risk, and how you’ve reacted to market drops in the past.
We help you build resilience into your financial plan — so that even if you experience a Year 2 like Option A, you won’t be tempted to jump ship.