“You Have to Know When to Fold ‘em”

This line from Kenny Roger’s song “The Gambler”, summarizes the most difficult part of the investment process, admitting you made a mistake and taking your losses.  Many investors often tend to close their eyes rather than confront the facts.

This problem is not limited to individuals.  The financial pages are littered with examples of some of the world’s largest and most successful investors watching train wrecks while doing nothing.

Jason Zweig recently published an article in the Wall Street Journal that, in turn, referenced a number of books and articles related to the relatively common problem of recognizing when an investment opportunity is souring.

Given that knowing when to sell is difficult, investors may benefit by seeking some assistance, a second opinion for example, by talking over their assumptions and strategies with a trusted advisor(s).

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA