#investor-psychology

#investor-psychology

In sharp contrast to financiers and politicians, VC investors are slippery creatures. CIOs have a hard time decoding our language. Venture capitalists are asset managers, but we talk like superheroes. We speak in hyperbole and aim, unironically, to change the world. We are incessantly crushing it, even though our portfolios are laughably unprofitable.

To start off, we can define a correction as a decline in the S&P 500 index of 10% or more from its most recent high. If the drawdown reaches 20% or more, then it's not just a correction; it's considered a bear market. Using the SPDR S&P 500 ETF Trust as a proxy, we can see that deep drawdowns have occurred on a regular basis since the early 1990s.

In the high-stakes crypto landscape, volatility is more than a market characteristic; it is a psychological battleground, filled with euphoric highs and crushing lows. In this environment, every moment feels like a rollercoaster, fuelled by fear, hope and hype, and while some investors thrive, not all do; in fact, they may end up burning out because they react emotionally to price dips.