Cut Your Losers Short

The best investing advice ever:

Cut your losers short and let your winners run… Cutting your losers short forces you to be humble and intelligent. It rotates you away from the sectors and stocks that are not working. Best of all, you are forced to admit your own fallibility — crucial for all investors.

My most valuable investment is my time. Sometimes I spend several months chasing a goal that consistently gives negative returns. Part of me wants to average down and stick it out, because I’m emotionally attached to whatever belief caused me to make that initial decision to chase this goal. But that could leave me handcuffed to a company as it gently eases into the grave. Better to write off sunk costs and invest more wisely in the future.

There are plenty of investment opportunities out there. Cut your losers short.

Ritholtz’s Rules of Investing –Washington Post


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