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Through an illustrative example, author Gary Mishuris contrasts three types of investors:

📌 Cautious Claire: Bets on a negative economic outcome, prioritizing safety over potential high returns

📌 Aggressive Anne: Assumes an optimistic economic future and invests in high-risk, high-reward assets

📌 Prudent Paula: Balances her portfolio to perform reasonably well across a range of scenarios, blending safety with exposure to high-growth investments

Amongst these examples, each investor would be perceived based on whether a negative or positive economic scenario unfolds. Claire or Anne would be celebrated if their predictions proved correct, while Paula’s balanced approach would go unnoticed, despite being the most prudent choice in the face of uncertainty. These responses stem from outcome bias, which often distorts perceptions of investment skill, attributing success to foresight when it may simply be luck.

Key Takeaways: When you prioritize risk management—versus betting everything on a single outcome—you are more likely to gain greater peace of mind when it comes long-term investment resilience and preservation. For many, that is priceless.