I was an amateur pilot. I remember vividly an episode happened during a training class ten years ago.

That was a very windy day. Up to that point, I had only experience flying in calm weather. As soon as my Cessna took off, I immediately felt the difference. My plane was tugged and pulled in all directions by cross winds. I felt like I was losing control of the plane, and fear swelled up from the bottom of my spine to the top of my head. I sat stiffen in the pilot seat and my sweaty palms grabbed tightly at the control handles like a sinking person holding onto a straw.

My trainer sensed my tenseness and she asked: “Are you OK?”. Not willing to acknowledge my fear, I asked her instead: “Is it more dangerous to fly in turbulent weather like this?” The trainer smiled and said: “It is not more dangerous to fly in turbulent weather. The plan was built to withstand any turbulences. But occasionally, an amateur pilot would lose his cool and do something stupid. That’s the real danger.”

Market Declines and Recoveries

I’ve been saying all along that a market decline caused by a crisis should be considered as a temporary discount of assets prices as opposed to a permanent loss of wealth. The chart above is the evidence. You only permanently lose your wealth and give up all future gains when you freak and sell at the bottom. That’s the real danger.

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