[Alyssa]

When do you let an underperforming stock go? I’ve got a couple that are in the hole -32% (SNOW) and -77% (U). I’ve held them since 2021.

Do you cut your losses or keep letting it ride?

[Charlotte]

Would you buy them again today? If not, don’t keep them. Look into sunk cost fallacy.

[Prasad]

One of the best day traders I know of always cuts losses at 15%, no matter how good the future looks for that stock.

I didn’t follow this and lost 90% in one of my stock picks before I sold a couple of years ago.

Now that you have these large losses, just sell them and invest in index ETFs (like VTI and AVUV).

If they are in taxable, you can take deduction for your losses. And don’t buy individual stocks again without an exit plan that you set when buying and actually following it.

Since this was hard for me, I have stopped stock picking for the past two years and I am doing much better psychologically and financially.

[Tim]

I will say the sunk cost fallacy is real. I held on to a few losers way too long hoping for a turnaround that wasn’t coming.

I finally cut bait because I was sick of looking at them and bought different stocks with higher upside and they have done very well.

[Frank]

You should never buy a single company without an exit plan. If you didn’t have one, the question is, “would you buy this today”?

If the answer is no, dump it.

[Dave]

Let it ride, maybe…sunk cost fallacy is great but that is assuming that it truly is a sunk cost.

It’s normally applied to things that have a known diminishing return, like doing one more run down the ski hill or eating one more bite to finish that Costco hotdog you enjoyed at first but are really less into.

If you have a significant portion of your wealth in losing stocks it might be a good idea to start offloading poor performers and find mutual funds that better suit your needs.

If it is just gambling money it is sometimes fun to ride the whole wave, complete failure or massive returns.

I’ve seen some companies near the brink of failure explode into wild success and others slowly die away.

[Kevin]

I have one of those called Boeing. Down 40. Bought before covid and they keep shooting themselves in foot with the max delays.

The day I sell it the government approve max 7 shipments. That being said I am holding on and may buy more because I believe a monopoly will thrive soon.

Remember though you aren’t going to have all winners and you don’t have to make it back the same way you lost it.

If you believe the company has changed and you no longer see the turnaround, cut your losses and make it up elsewhere

[Destin]

This is why I like selling options. You can sell a put at the price you would like to own. And sell a call at the price you would like to exit.

You set the price.

[Author]

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