master-of-none:

Another area where I found that I differed from others is investment strategy. When the Asian markets crashed in 1997-98, I lost a lot of money in my 401k. So what did I do? The only thing that seemed logical, I sold all of my non-Asian stocks and went 100% into Asia. After all, I thought, Asian stocks were now “cheap.” Over time, however, I found that many people don’t look at the world that way. They might be momentum traders, assuming something that has crashed will keep crashing, or they might take the Asian crash as a personal affront, and sell their Asian stocks in disgust. Or they might simply lose their appetite for risk. - Scott Sumner, Bentley University Economics Department

Such things should come with severe warnings. If you look back at 1992, the Japanese Nikkei had already crashed and reached a bottom. Similar story, right? However, if you decided to be contrarian and invest then, you would be sitting with a 30% loss more than a decade and a half later. Needing a 50% gain to just break even isn’t so great to recover even a single year’s losses (the position of many Americans). There’s a difference between losing your appetite for risk and Russian Roulette. It’s really not that fine of a line, either. Going all-in on a single trade is gambling, nothing less.