If you’re investing in individual stocks, be sure to stick with your plan. Too many investors hold on to their losers when the fundamental reason they bought the stock in the first place is no longer a reality. They tell themselves it will go back up, and they’ll ride out the current slump. But what happens if the current slump is the new reality and the stock is destined to languish at it’s new value until the company folds.
Admit when you’ve made a mistake and move on. Have a plan and stick to it. This is another one of those situations where having a ranking system helps. Once a stock’s price crosses a given threshold determined by you, cut it loose regardless of the reason it crossed that threshold. Remember: You chose that threshold for a reason – don’t rationalize yourself out of doing what’s necessary.
If you liked this, you may also like:
Jim Cramer’s 10 commandments of stock trading.
25 Investment rules from Jim Cramer.
Cramer’s Top 5 Picks for Stocks to Buy
Cramer’s Bottom 5 Picks for Stocks to Buy
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