It’s happened more times than I care to admit. I hold onto an investment, convinced it’s going to bounce back, only to watch it slowly, agonizingly, sink lower and lower. Ugh, what a mess! And the worst part? I *knew* I should have sold. But the fear, the “what if” scenario, always paralyzed me.
The Pain of Holding On (Too Long)
You know, there’s this weird thing that happens when you’re watching something you own lose value. It’s like you become so invested (pun intended!) in being right that you ignore all the flashing warning signs. I mean, seriously, I’ve held onto stocks that were clearly tanking, justifying it with flimsy arguments like “it’s a long-term investment” or “it’ll come back eventually.” Who even knows what’s next, really? The amount of times I’ve thought “this is the bottom”… only to see it keep dropping. It’s like watching a slow-motion train wreck. It’s awful.
And it’s not just stocks. I remember this one time I bought a bunch of crypto—I won’t name the specific coin, because honestly, I’m still embarrassed—and it shot up like crazy. Everyone was talking about it, promising it was the future of finance. But then, the inevitable happened. It started to dip. Just a little at first, and I told myself it was just a correction. A healthy pullback. But then it dipped again. And again. And again. I clung to it, convinced it would rebound, until it was practically worthless. Lesson very painfully learned! Was I the only one confused by this? Probably not!
I think a lot of it comes down to loss aversion. We feel the pain of losing money much more acutely than we feel the joy of gaining it. So, we hold on, hoping to avoid that pain, even when all logic points to selling. It’s like ripping off a bandage—we know it’s going to hurt, so we put it off as long as possible. Only, in this case, the bandage just keeps getting stuck to more and more hair.
My “Aha!” Moment (and a Tech Blunder)
Okay, so this might sound a little silly, but my turning point came during a massive decluttering spree. I was going through old clothes, and I found this sweater. I had bought it years ago, thinking it was super cute, but I had literally never worn it. It was itchy, the color was all wrong, and it just didn’t fit right. But I had held onto it, because… well, because I had bought it! It felt like a waste to just get rid of it.
Then, it hit me. I was doing the exact same thing with my investments. I was holding onto things that weren’t serving me anymore, simply because I didn’t want to admit I had made a mistake. Funny thing is, I realized that selling that dud of a sweater at a garage sale (it went for $2, by the way) was more satisfying than letting it take up space in my closet for years.
Right after that I swore I would change my approach to investing. I’d decided to be more decisive and trust my instincts. That’s when I decided to use an automated investing platform, thinking it would remove the emotions. This was back in 2018 or 2019. I used one of the first robo-advisors, something called Wealthfront or Betterment (I can’t remember now). I put a small amount of money in, but I quickly realized that I couldn’t just leave it. I was *constantly* checking it, fretting about the algorithm’s decisions. It turns out, even automation can’t completely eliminate the fear and anxiety! It’s kind of like trying to automate friendship. It…doesn’t work.
Learning to Let Go (and Making New Mistakes)
So, what’s the solution? Honestly, I’m still figuring it out. But here are a few things I’m trying to keep in mind:
- Have a Plan: Before you even buy an investment, decide on your exit strategy. What are your triggers for selling? What price point will make you reconsider? Write it down. Stick to it.
- Don’t Fall in Love: It’s easy to get emotionally attached to your investments, especially if they’re doing well. But remember, they’re just tools to help you achieve your financial goals. Don’t let emotions cloud your judgment. Easier said than done, I know.
- Diversify, Diversify, Diversify: This is Investing 101, but it’s worth repeating. Don’t put all your eggs in one basket. If one investment tanks, it won’t wipe you out.
- Accept That You’ll Be Wrong: No one gets it right every time. We will all make mistakes. The key is to learn from them and move on.
- Consider the Opportunity Cost: Holding onto a losing investment means you’re missing out on other opportunities. What else could you be doing with that money? Could you be investing in something with more potential?
What’s Next? (Probably More Mistakes)
I’m still a work in progress. I know I’ll probably make more mistakes in the future. I am only human. But I’m trying to be more disciplined, more objective, and less afraid to pull the trigger when the time is right. And, you know what? I’m also trying to be kinder to myself. Because beating myself up over past mistakes isn’t going to help me make better decisions in the future. It’s just going to make me feel worse. I guess that the most important thing is to keep learning.
If you’re as curious as I was, you might want to dig into behavioral economics—it’s fascinating stuff that explains a lot about why we make the financial decisions we do.
