Slicing through the BS and explaining famous words used in personal finance.
Roller coasters aren’t really my thing because I quickly get nauseated on them. The same is true of high-risk investments, steep drives, and speedboat excursions. That last one can be nauseating in a variety of ways, occasionally reaching the “puke point,” as it is known among investors. But what exactly is the ‘puke point’?
The phrase describes assets whose value is fast declining. Do you ever ride a roller coaster and feel like your stomach is about to burst when you hit a particularly steep drop? It works similarly, but with investing.
When you reach your own puking point, it signifies you are unable to handle the huge losses incurred by an asset. You choose to sell at a loss in order to stop more losses. It’s a major loss, cue sound of puking
Recall how Meta stock dropped below Lil Jon’s price last month? Some people might have puked at that time. The truth is that everyone’s puking point differs. I can hardly stomach a log flume ride at a theme park, yet someone else might be able to down a Mountain Dew Big Gulp before riding Kingda Ka.
Similar to this, if your puking point is low, you might flee at the first hint of danger. A high puking point indicates that you may be more risk-tolerant. In either case, if you notice losses, consider: Can I manage a little stomach discomfort?