I’ve seen Nassim Taleb, Warren Buffett, Charlie Munger, and Paul Graham all tackle this idea in different ways over the years: a percentage increase and decrease feel similar on the surface, but are drastically different in reality.
Paul Graham framed it well recently:
“Many people implicitly assume that if a number shrinks by x%, it has to grow x% to get back to its old value. That’s not far off for small x. A number that shrinks by 10% only has to grow about 11.1%. But a number that shrinks by 75% has to grow 300%.”
The decline is immeasurably more dangerous than the increase.
Act accordingly.