Sunday, November 23, 2008

Holding on for Hope

Have you ever bought a stock, saw it plunge and then hold on to it for months waiting for it to rise from the ashes? At what point do you let it go?

Well, I have done that very thing before many times in my early years of trading. It took a long time for me to realize that dead money is just that: dead. It cannot do anything for you while it is sitting still.

I learned to cut dead money loose so that I could make it work for me somewhere else. True, some stocks will rebound and I'm not saying sell for a loss, but the grip of death on a stock that has went sour must be broken.

Remember that the money you are losing can be easily regained on a stock on the run. Hope is a good thing. Sooner or later, however, you must move on for better opportunities. Make your money work for you.

Have a good one,
Roger