Have you ever wished you handled a past situation differently? I have a very talkative inner critic. Most of the time, this critic’s good intention is to push me to excel. Other times, this critic can be counterproductive.
The counterproductive critic loves to chime in when it comes to selling a losing investment:
Critic: “Winners don’t have losing investments. I will just wait for it to go back up before selling it.”
Advisors are guilty of this as well: “If I recommend selling it at a loss, I will be admitting I made a mistake in recommending it.”
The market doesn’t know or care about your initial purchase price. You shouldn’t, either. Instead of focusing on the past, focus on what you want to have happen next.
Re-examine your rationale for buying it. Was your rationale specific and measurable? Are those reasons still valid? Was there information missing from your rationale? How will you know you are wrong? What’s changed besides price?
We all know predicting the market is impossible. Given that, it is unreasonable to expect perfection in our investments. Have a disciplined process. Document your rationale and the supporting evidence. Know when you will sell before you buy it regardless of whether it goes up, down, or nowhere. The moment you realize you made a mistake, correct the mistake. Hope is not a viable investment strategy.
This advice applies to that FAANG stock you bought this summer, but it also applies to interpersonal relationships.
This Thanksgiving, give up all hope for a better past and focus on what you want to have happen next.
Happy Thanksgiving from all of us at Impact Capital!