Take Responsibility for Your Stock Losses
I've overheard people complain that they lost money because Alan Greenspan raised, lowered and/or left rates unchanged. Oh, and Eliot Spitzer, too.
Well, folks, I've got some bad news for you. None of those are the reason any of you lost money. The dirty little secret is much simpler. You lost money because you bought a stock, and that stock went down, and then you sold it. Period, end of discussion.
Buying high and selling low is a lousy investment strategy. Worse is buying high and not selling at all as (paper) losses mount. Think of Lucent (now Alcatel-Lucent (ALU)) or Sun Microsystems (JAVA) or Nortel (NT), or the slew of stocks that went to zero. Too many people rode 'em all the way down, rather than admit a mistake and take responsibility.
You see, with responsibility comes a natural tendency toward planning. If you buy without a plan in place for when things go south --- when your original thesis turns out to be wrong -- then you are at fault.Sorry to be the bearer of this bad news, but the sooner you start accepting that simple truth, the better off you will be. Why? Because all of the excuses above are foreseeable events that only investors (and fools) fail to anticipate. Analysts can be wrong, TV is about ratings, insiders sell, and talking heads talk. Is that a surprise? Hey, guess what? The Fed raises and lowers rates, the FDA pulls drugs, and attorneys general prosecute. Review some of the aforementioned complaints, and you will see how foolish they sound. Now try this one: I lost money because I made a bad investment. I lost a lot of money because I made a bad investment without a contingency plan for when things went wrong.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV