Buying is easy and exciting. The problem comes when after a few months the stock underperforms. How did this happen? What should you do?
Selling losers is a common struggle among investors. Mike and co-host Vero share a few tips on how to identify them; when it is time to let them go; and how to make sure it doesn’t happen again.
Let’s clean up your portfolio!
- The definition of a loser in your dividend growth portfolio.
- When is the right time to sell.
- How to identify the source of the problem.
- How to prevent holding losers in your portfolio.
- Is selling your winners a good idea?
What Should I Do? Sell or Wait?
First rule: never sell your losers because you lose money.
Second rule: never keep your losers because you lose money.
Selling a loser is first and foremost an admittance that you were wrong. Nobody likes being wrong, especially when it means losing money. Denying the problem and keeping your losers forever is a self-destructive way to avoid the cold hard truth.
When we get hit with a 40%+ loss in our portfolio, many of us will be tempted to keep it for a while. I’ll keep my shares until I recover a good part of my losses. Bad decision.
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