Skip to main content
No. of Recommendations: 17
Wolf, emotions can be the most challenging aspect of investing because you’re dealing with probabilities and the unknown. HP Lovecraft once wrote, “The oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is fear of the unknown.” It may seem like an odd quote for an investment forum, but it certainly applies. Selling out of fear is almost always a bad idea, especially if there’s no news to warrant it. There are a number of ways you can potentially deal with it.

First, if your position is making you lose sleep at night maybe it’s too large for comfort. Only you know if that’s true.

Then, if your stock has run up a lot as it did in your case and you’re afraid of a correction why not simply trim it a little? At almost 100% profit, you could’ve even taken your initial investment off the table and essentially have a free position. At least then you could still participate in future gains.

JP Morgan was once asked what the market would do. His response was “fluctuate.” No one knows what a stock will do other than that, but if you focus on the business and its prospects instead of its stock price you’ll probably be less likely to make poor and emotional decisions. Even a 50% drop in a stock today barely looks like a blip on a long-term chart. Maintaining perspective and a long-term view should keep you invested as long as your thesis for owning the stock is still intact.
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.