Learning When to Sell Investments

Selling an investment is one of the hardest things investors do. They don’t want to sell losing investments, because they don’t want to give up or admit they’re wrong. Many people often don’t want to sell winning investments, either, for a wide range of reasons. In this article, Ben Hunt explains the importance of selling winning investments before it’s too late. It’s good advice that you rarely hear.

We’ve all been trained to “let our winners run”, and there’s a lot of truth in that for a trader. Much less so for an investor. For an investor, it becomes an excuse to keep a discretionary position in the portfolio well past its natural lifespan, leading to a bloated portfolio, chock-full of merely good or used-to-be good positions. It’s the unforced error that I see more frequently than anything else out in financial advisor-land, because it’s really hard to say goodbye to an investment that’s served you well and faithfully.

I’ve buried lots of investments. You should, too.