STREET DOGS
Sell when it makes sense
How the typical investor procrastinates when it comes to selling, writes Michael Pireu
William O’Neil on selling losers: Some people say, "I can’t sell that stock because I’d be taking a loss." But if the stock is below the price you paid for it, selling doesn’t give you the loss; you already have it. If you aren’t willing to cut your losses short, then you probably should not be buying stocks. Would you drive your car without brakes? Fred C Kelly, the author of Why You Win or Lose, provides the best example I know of how the typical investor procrastinates when it comes to making a selling decision. A man has rigged up a turkey trap with a trail of corn leading into a big box with a hinged door. The man holds a long piece of twine, connected to the door that he can use to pull the door shut once enough turkeys have wandered into the box. However, once he shuts the door, he can’t open it again without going back to the box, which would scare away any turkeys lurking on the outside.
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