Chapter 25Execute or Get Killed
I've just asked you to be the boss of your investments. Now I'm going to ask you to do something even harder: Be the boss of you. To successfully use a sell strategy, you must be disciplined enough to execute it. It's not easy.
If we surveyed 1,000 people and asked them, “What are the two things you need to do to lose weight?” every one of them would probably answer, “Exercise regularly and eat a healthy diet.” The answer is very simple, but it's not easy. If it were easy, no one would be obese.
Your sell strategy is very simple, too. When you hit your trigger point, you sell.* You can't equivocate and think, “Well, this might resolve itself” or “It looks like the trend might change.” If you second guess your plan or overanalyze the trend, you can get into trouble. By relying on emotions or trying to foresee the future, you may wait too long to act and lose a lot of money in the process. A sell strategy requires you to be dispassionate, and to act even when there is cognitive dissonance.
It Doesn't Matter Why You Sell…
Economist Robert Shiller famously called the years from 1995 to 2000 a period of “irrational exuberance.” Turned out he was right, but in my opinion, it didn't matter. I don't care why the market goes up. As long as the market is rising, ...
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