Friends,
We get a lot of questions. Whether its on social media, in our premium community, or (rarely) in real life.
Often, people are looking for us to tell them what to do in their portfolios. That's a question we can't -- nor want to -- answer. Legal and ethical concerns aside, we'd much rather teach people to fish than do the fishing for them.
There is one question, however, which we can readily answer. It goes something like this:
"I bought stock XYZ, and it's down 30%. I don't think it's a winning company. Do you think it's a good idea to wait until it gets back to my purchase price and then sell?"
If the only reason you're holding onto a stock is to break even, we can unequivocally say that this is a bad idea. (It's called "anchoring bias")
Remember, the market doesn't care what price you paid for a stock. It only cares about the company's potential moving forward. Consider all of the other things you can do with that money:
- Sell it to gain potential tax advantages for your loss.
- Use it to buy a stock you have much more faith in.
- Let it sit in cash to help you sleep a little easier at night.
Those are just three examples -- there are many more.
The root of this problem is simple: our ego gets hurt when we take a loss. But this is the difference between beginner and experienced investors.
Beginners can let a loss eat at them. Experienced investors know the long-term results of their entire portfolio -- and how those results help them lead the life they want to live -- are all that matter.
Stay focused on that, and you've tipped the scales in your long-term favor.
Wishing you continued investing success,
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Brian Feroldi, Brian Stoffel, & Brian Withers
Long Term Mindset
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P.S. Seen any great investing content lately? Reply to this email with what you've found and we might include it in a future newsletter.
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