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So, you've made a mistake

Now it's time to say goodbye

· Thoughts,time to sell

There's nothing worse than buying the wrong stock, watching it plummet in value and not doing anything about it.

This article in today's Australian sums it up clearly.

When is it time to sell a stock? We often find out, the hard way, there was a very good reason why the share price looked “cheap” once upon a time.

Let me first point out that making mistakes is simply par for the course. It will happen, and it will happen again. Take this prime piece of advice from someone who in the past has allocated positions in Slater & Gordon (SGH), Vocus (VOC), Pact (PGH) and EclipX (ECX): it never is too late to sell.

So rule number one should be that every decision and judgment needs to be made independently from what we’ve paid for our shares. All too often investors won’t sell at a loss, which can be the ideal starting point for accumulating much larger losses. Have a look at price charts for the companies I just mentioned. Can you see why I am happy today to no longer hold these shares?

What it doesn't tell you is how good it feels to finally divest from an underperforming investment and never have to think about it again.

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