Stocks are a voting machine in the short term that only measures what someone is willing to buy or sell the stock at in the short run. In the long run (pun intended) the growth of sales and (and hopefully a dividend) is what makes you money.
So, if you had bailed out using a simple "money management strategy to cut your losers at 50% or 75%", then you'd be out and you'd have missed the 134 times return.
Because if you can't afford to lose 75% first, then you will never make 130 times your money in your lifetime.
(The 2nd green box marks the 9/11/2001 level - NKE is up 919% since then)
However, would you suggest people to cutloss short ? i.e. cutloss when NIKE loss is about 8-10%.
Then if the stock show recovery sign (at -50% or more), it will be a great time to buy.
In that case with same amount left from cutloss earlier, one can buy more NIKE at even more discounts.
FYI I do agree with you that ... after people sell it ... they might never look back at it ever, thus they will miss a big rally!
#1. Fear of not being diversified.
#2. Fear of not having a highly paid, Wall Street expert in charge who has an MBA, CFA, Series 7, and a masters in Behavioral Finance.
#3. Fear of not having an army of accountants poring over balance sheets.
#4. Fear of not having a direct link to what the brokers are saying on Wall Street.
It's time to change the way people think. You only need to know how to identify a winner and how to hold onto it through thick and thin and let the power of compounding go to work for you, instead of against you.
The good news is we do have a resource like TV where this exchange from people with domain knowledge and sharp ideas is possible, and probable (like your great work Tim)
Even things that are notoriously cliched, like, "this is the yr I hit the gym 3x a week" or w/e, that actually produces near immediate, tangible results (!) and people still have a tough time with it. When you carry that analogy to something where you may see no immediate improvement even if you do everything right (investing over shorter term time frames, say 3mos to 1-2 yrs) then its really a special type of person who carries in in spite of that.
I'm not a bear on people getting better, or the utility of TV to advance this purpose, just that its no small task