Audit Your Life

Ride your winners. Let them ride! Dump your losers. Cut them loose!

Investors have heard this advice countless times—and most research supports this position. Yet even the most prolific and seasoned investors ignore it. They fear losing their profits when shares are up, so they sell them; they hate losing money when shares are down, so they hold them. Not because they think things will turn around in time and the company is failing forward. They just hate the idea of losing money.

Of course they know better. You should ride your winners as long as you can—they’re winners and winners win. You should dump your losers when prudence says quit—they’re losers. Yet so many people don’t, and they not only take money off the table ...

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