Card 2 . The Break-Even Ladder + The Opportunity Cost Of Holding For Three More Years.

RupeeCase

Education . Sunk Cost . 2 of 3

The break-even ladder

The deeper the hole, the steeper the climb out. Then time charges interest on top.

The drawdown adds up arithmetic. The gain required to recover it grows non-linearly. The opportunity cost of the wait grows on top of that. Two costs stacked on the same bias.

Gain to recover = Loss / ( 1 - Loss )

-10pct

+11pct

0.9yrs

1.1x

-20pct

+25pct

2.0yrs

1.3x

-30pct

+43pct

3.1yrs

1.4x

-35pct

+54pct

3.8yrs

1.5x

-50pct

+100pct

6.1yrs

2.0x

-70pct

+233pct

10.6yrs

3.3x

Same Rs 65000 rump position . three years forward . hold vs cut and redeploy at the index

Hold . stock drifts flat

Rs 65000

Three years pass. The buy price still does not know. The position is the same rupees, no compounding, no dividends counted.

Hold . stock drifts -3 pct a year

Rs 59324

If the original thesis broke and the slow bleed continues. Rs 5676 lost on top of the original 35 pct hole already taken.

Cut and redeploy . index at 12 pct

Rs 91320

Same Rs 65000 moved to a Nifty 50 TRI cohort earning long-run market return. Rs 26320 more than hold-flat. Rs 31996 more than hold-decay.

The two costs the bias hides

A 35 pct hole needs 54 pct to climb out. While you wait, the same rupees parked anywhere reasonable were compounding without you. The first is the recovery asymmetry. The second is the opportunity cost. Both are paid in rupees you never see on the statement. The line item that reads "down 35 pct" is the smaller of the two bills.