I had written a post “The 2 Other Ironies of Investing”, which many of you loved. Guess what! There is another interesting one. While I have written about it before, but this one is so important that it merits a Nano of its own.

“When the stock prices fall, risk falls too. But the perception is that risk goes up when stock prices fall (this is an irony). Thus, there is a rush to exit the stock market before it falls because people think risk is going up. This is exactly the reason why people panic and sell.

Jack Raines of YoungMoney writes, “Risk is a funny thing. No one worried about risk when we printed off trillions in stimulus. No one worried about risk when the interest rates fell to near zero. No one worried about risk when companies with no sales went public as SPACs (Special Purpose Acquisition Companies) and stocks jumped 10% a day because Elon Musk tweeted an emoji.”

It’s a well-established fact that no one is worried about risk when the stock markets are going up. No one is worried about risk when loss making companies list at crazy valuations. No one is worried about risk as long as the portfolio reports are in the green.

He adds further, “Risk is a paradox. It is highest when we forget it exists, and it is lowest when it’s all we can think about”.

And that my friend is yet another irony of investing.