Sometimes you Have to Take a Loss
Good Riddance. |
At some point, if what you’re doing isn’t working, it’s time to try another tactic. I was having no luck selling my hard-cover copy of Special Topics in Calamity Physics
After no luck on Half.com for a week, two days on Amazon was long enough for the book to sell. But Amazon’s huge commission wiped out any profits I might make. The email from Amazon:
Item: Special Topics in Calamity Physics [Hardcover] by Pessl, MarishaCondition: Used – Very GoodCondition Note: Cover, pages very clean, with dustcover. Very minor creasing on dust cover corners.
Listing ID: 0928W308391
SKU:
Quantity: 1
Purchased on: 10/04/2007
Buyer’s Price: $3.26
Amazon Commission: ($2.83)
Shipping Credit: $3.99
Your Earnings: $4.42
Shipping will run me $2.13, leaving me with $2.29. When all was said and done, I ended up losing 22% of my $3.00 investment. With the 42ยข I had left over, that leaves me with $2.71. In accordance with Rule 9, that puts me back at step 4.
A bummer, of course, but there’s an important lesson to take from this: It is far better to take a loss than to leave your assets tied up in a losing investment. If your first judgment was wrong (and no one is right 100% of the time), you need to get out ASAP, free up what capital remains for future ventures. That applies equally to a $3 investment and a $3 million investment.
Far too many people ignore this simple concept every day. They stay in unhealthy relationships, afraid to be alone. They ride stocks all the way down to zero, hoping for a recovery. They stay in dead-end jobs they hate, too afraid to leave.
Cut your losers short, and let your winners ride. This simple concept can be applied profitably to every area of your life.
On to the next venture.
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1. I must compliment you for putting such a great psychological barrier in so simple words.
2. I will try to improve my blog for Free Indian Stock Tips with examples similar on the lines given by you.
3.Hope to see you commenting on my blog.
Regards
Good point of advice. A strategic decision can go both ways, and taking a loss in a loosing battle IS better then continuously loosing until there is nothing to loose.
But when it comes to stocks I have a different point of view. It must depend on the type of stock you hold.
I totally agree with you. the first lost is usually the smallest.
i took a $35,000 hit on 31st december just to get out of a bad real estate
investment. despite being over 50% of my annual income, it was worth it!