There was a lady in Sorrento wearing a pink dress at a party that night. She asked the man in front of her: "Do you think that someone who has been married to a woman for 25 years could decide to leave her for me?" She was beautiful. She was staring at him now. How could it ever be possible for someone to resist her? He saw his own life passing by. The relationship with his wife had become difficult, and his job was keeping him very busy but unhappy. In his mid forties, he was seeing his life progressing on a declining trend. He knew he had to do something about it. He answered the lady: "He is a lucky man, but it is not so easy. There are people who do not accept taking a loss," he continued. "You manage your life the same way you manage your portfolio of stocks."

The bear market had started a year earlier. At the time, it was difficult if not impossible to see what was coming. In the same way, at a certain point his relationship had started to get worse. When prices printed the first leg to the downside he hoped it was only a correction. But prices moved again down to lower lows month after month. He could see his losses accumulate and still he could not act. His relationship was exactly the same, low after low with some rebounds from time to time. The trend was clear, but he could not make a decision. Hope, fear, a sense of guilt, it was difficult to take responsibility for a failure.

He said: "People do not want to sell at a loss. They keep their positions hoping that things will improve. It is human nature. Eventually, when they are desperate and get their margin calls because markets capitulate, they finally liquidate and take huge losses. Similarly, most people will not close their relationship until there is really no other alternative and things have become unmanageable and nasty."

She asked: "So what is going to happen?"

"It depends what kind of guy he is. Ask the lucky man if he uses stop losses in the markets and you will know if he will leave his wife soon. If he does not, then you have to hope for extreme events to come that will overwhelm him and force him to decide." He could see the path he was personally following. He was hoping for her that the lucky man was different. "I wish you good luck. Let me know how it goes," he said and left. After six months, he was reading a newspaper at the airport in Washington D.C. when he recalled that conversation with that lady in Sorrento . Markets were plunging to multi-year lows in a wave of panic. He was at a critical point with his wife. He asked himself: "Can my relationship survive this phase? What has happened to the lucky man?" After all, when you have a sell-off a new trend will eventually emerge… He did not know at the time that he would meet her again.





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