When to Cut Stock Losses

By moneygodmother

Investors trying to shake their nerves are hunting for stocks and other investments to park their cash. (There’s a lot of money sitting on the sidelines right now.) But sometimes it’s easier to sit immobile, waiting for the stocks you already own to recoup their losses. 

Deciding when to sell a stock or any other investment is one of the most difficult decisions for most investors. Why? 
• We don’t have an exit plan. 
• We still follow the buy-and-hold forever mantra.
• We tend to get greedy. (That old Wall Street saying rings true…bulls make money, bears make money, but pigs get slaughtered.)

Wait! You don’t have to recoup the money the same way you lost it.

In other words, if you hang on to losers and think you’ll wait to break even before you sell, maybe you want to think again. If you bought a stock and watch it go down regularly, maybe it’s time to cut losses and invest in something else. 

Have you ever bought fresh fruit and left it set in the frig too long? Have you ever bought end-of-season clothing, put it in your closet and the next year it didn’t fit?

That buy-and-hold strategy may not work as well for investors in the coming months. So…keep track of your investments. Know when you want to sell. Set an exit strategy when you buy and you will not get caught with stale or ill-fitting stocks.