Letting Losers Run

Fundamentals of Market Investing by Adam J. McKee

If you do buy an investment that performs poorly and you realize that it is the fault of the instrument and not the overall market, you need to sell it.  This could be an individual stock that has deteriorating fundamentals—something you bought and now regret—or it could be a mutual fund that has extraordinarily high fees.  Pride is a deadly sin; the market is no exception to the rule.  If you made a mistake and picked a bad security, suck it up, admit you were wrong, and liquidate it.  Countless investors have lost their shirts waiting for a bad investment to break even.  Buying high and selling low is a terrible investment strategy, but holding on until it gets much, much worse is the worst strategy of all.


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