This one word—selling—describes what traders and investors have tried to do successfully since the Dow Jones Industrial Average was created in 1896. Vast market sums have been lost by failing to liquidate equity positions in a timely manner. When I do my chart analysis on my holdings and conclude that a particular stock is in a weakened state and should be sold in whole or in part, I almost always sell the position “at the market” to have the order immediately executed. Hey, I want my capital returned to me ASAP! I don’t try to extract an extra several cents in a position worth thousands of dollars. That’s not a sensible risk–reward strategy to me. Don’t try to best the market by reaching for that additional bit. It’s not worth it. I repeat: it’s not worth it, and the times you successfully get that extra small bit will be greatly outweighed by the times (or possibly even a single instance) in which you fail to do so. I covered this premise in chapter 23, “Stop It,” but it bears repeating. It’s like the bull–bear market discussion we had previously; a single negative period can wipe out multiple positive ones. You need to completely comprehend this market tenet. It can be financially ruinous not to.
Selling a stock is not the same as buying a stock. In the latter situation you are parting with your money; in the former you’re getting it back. I consider the former more important. I think this point is sometimes lost in the investment decision-making process. When it comes time to end a failed marriage or an unsuccessful business arrangement or sell a piece of property that’s weighing negatively on you, does it pay to hold out for slightly better terms at the risk of continuing down those detrimental paths? Since you’ve already made the choice to remove yourself from those situations, is it worth the extra aggravation? Or do you just “want out” so that you can relieve yourself of the stress and move on? I’d always choose the latter option. Personal situations like these aren’t just emotionally draining; they simultaneously impede you from adopting a better mind-set for future success in your other endeavors. It’s a double-edged sword. Both hurt! As I opined in chapter 10, “Mirages,” step back and look at the big picture first. It often allows for clearer viewing.
