So long as you loose less than the next guy you come out in frontIn a deflation everyone looses, the differentiating factor is how much. 25% loss sure sounds better than 50%...my mother had a cash option, so she actually made a good 5% this past year, she is now twice as wealthy relative to stock only investors
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The relative measure you suggest is peculiar. I don't measure my well-being compared to anyone but myself. It's not as though we're seeing any general deflation in the economy, just a sharp decrease in wealth. Not a relative thing at all.
This reminds me of the social sciences experiment where people were asked if they'd prefer to take a job that paid $100,000 a year if their colleagues were making $150,000, or $75,000 a year if their colleagues were making $50,000. Most people picked number two. This may go a long way towards explaining why economies behave as they do. Emotions often trump rationality.
EDIT & CORRECTION: The experiment was a study of happiness and relative earnings among neighbors. The experimenters found that people's reported happiness was highly dependent on them doing better than their neighbors.
http://www.nber.org/~luttmer/relative.pdf