Read? When a Giant Gain Causes Pain (3)
How about this blog post by our own local blogger on something quite similar like "When a giant gain causes pain"?
Read? The Minions (Millions) Mentality
One of my problems in investing is the inability to hold on to winners. This problem becomes more obvious as the stock approaches a 100% gain, which is the threshold for a multi-bagger and comes with bragging rights. Watching the stock price fluctuating just above and below the line is nerve-wrenching. On one occasion, I decided that I had enough of the jittery and sold for a 163% gain, only to watch the stock climb another 118%! In other words, I sold for double my purchase price, and the price doubled again after I sold! It was not a minion position and the amount of "lost profits" was staggering. The stock was Riverstone.
This is why I said that when there is no emotional attachment to the share price, the feeling is truly liberating. When there is nothing to anchor the share price, such as the 2-bagger threshold, the sky is the limit. The minions mindset also gives me a peek into how the rich treat their investments. Whenever there is a stock market crash, newspapers would tabulate how much money the billionaires in the world have lost. Yet, they never seem to want to sell their massive shareholdings in the companies they founded or owned. When the stock market recovers, these billionaires made much more money that they had lost in the crash. They are in the top 10/100 billionaire list for a reason: they never sell. Had they sold at the top of the stock market, they probably would not be in the list for much longer. The dividends from the stocks they own are way more than sufficient to fund their lifestyles. There is no need to sell the stocks to protect the value from dropping in a stock market crash. In contrast, retail investors like myself are always looking to protect the value of our investments. If someone were to tell me with 100% accuracy that tomorrow's stock market would crash, I would sell a majority of my stocks. (Actually, if you read my blog, I do think that a crash is coming, and I'm 50% in cash. Thus, you can see that I am still a very long way from adopting the mentality of the rich).
The minions might be small and insignificant. But they have important lessons on how to make millions. I have certainly learnt a lot from them.
Sunk Cost bias
Many retail investors will have no problem living with sunk cost bias over their losing or rotten stocks. Once they have mentally written off these lousy stocks or fallen stocks; they could move on without further emotional pain.
But; for sitting on giant gain;
Quote "It will take an immune heart and insane mind to take such plunge, survive and continue like nothing has happened!"
"Succeeding as an investor takes a strong mind, but a stronger heart. That is especially true when stocks plunge—or soar."
Hmm .. Somehow Uncle8888 have learnt it well i.e. both plunge and soar!
Nature or Nurture?
If you think it is nurture; how about doing what few other bloggers doing. Selling ticket to hear from the horse's mouth. $9.90?