The psychology of selling

I’m no longer a young buck anymore and I’ve slowly started coming to terms with it. I pushed myself hard these first four days of work putting in some extra hours and I’m proud of what I got done. Unfortunately the end result of pushing myself that hard is that I’m a bit tapped out today. I’m planning on powering through the morning and early afternoon and then starting my weekend/recovery early.

Moving on. One thing that I and others have struggled with in investing is pulling the trigger on selling. Early on in my career, I thought that pulling the trigger and buying stock was going to be the hard part. That’s when the cash leaves you of course.

As I’ve gotten more experience investing, I’ve learned the hard way that selling is much harder. There’s just something psychological about parting with your initial thesis or just taking home a solid win.

If the investment has not worked out, it’s really hard to admit that you were wrong, take your beating, and sell for a loss. What if you were right and it recovers? The FOMO is real.

If the investment is a win, then it becomes hard to just take your win and move on. What if the investment keeps going up and you miss out? The FOMO again is real.

I’ve learned that the best investors change their mind often. It’s a game where you can successful even if you are wrong often. On top of that, the best investors know when it’s time to take your wins. Institutional investors will often hedge their positions. For us retail investors, the best move is often to just sell and take your win.