If you do not have a plan you will likely be forced to sell when the emotional pain of holding on is so intense you end up dumping at the bottom, because the market is like that, it will take all of the unsuspecting people who do not have a plan and chase them out of a stock and make them buy when the price is too high.
“It’s often best to take the first loss” with the idea that, once the stock reverses (goes back up), you can buy it back for a nominal loss, rather than hanging on to it until the loss gets painfully large and/or causes you to tie up valuable cash in a losing stock when others are in an uptrend.
If we’re talking about commitment, what’s the corresponding issue with dating when we’re talking about selling a stock?
It is like letting off steam in a relationship. You are going to get hurt, emotionally damaged. Two people in close proximity will end up having conflict. How can two sinful imperfect humans not get into some kind of conflict?
Your ability to “not let the sun set on your anger” (Bible) and to problem solve, to communicate and to be a student of the other will be tested. Let those tests make you a stronger person and through humility and understanding you will not turn into a grudge holding jerk.
But for the benefit of the relationship, or long term holding, don’t let the emotion and pain build up to the pint where you end up EXPLODING.
I told a close buddy once, I went out with some lovely gal who said she never heard her parents argue once in her life. My friend cynically remarked, “They must have locked her up in a closet.”
You continue to add at times when the stock comes down to a particular buy point (i.e. the 50 day moving average).
In stock trading and in relationships, we have to be alert to our emotions and our rational thought.
In the long term holding relationship, it doesn’t mean you have to dogmatically “hold” onto every one of your pet laws and idiosyncrasies. Sometimes you have to let some things go to gain a longer term benefit a the future opportunity.
An ideal time to get back into a stock is like strengthening your relationship with your significant other once the tremors of resolved misunderstanding and forgiveness have taken root.
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That’s it for stock trading. Unless I get a lot of requests for stock trading insights, this is it, maybe someday you’ll need to refer to this!
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Challen Yee