Why do people sell their winners, and hold their losers? Behavioural Finance explains the "Disposition Effect"
https://www.afr.com/wealth/personal-finance/why-we-sell-winners-and-hold-losers-20230418-p5d1es
No matter who said it first, "cutting the flowers and watering the weeds" is a perfect analogy for a terrible investor weakness – selling winners too soon and holding on to losers.
"Over time, that will bias your portfolio to increase your weight of losers over winners....Obviously something to avoid."
A good summary of some basic investing principles to live by.
Here are the investment rules you will find in common with many of the greatest investors in history.
- Cut Losers Short And Let Winners Run.
- Investing Without Specific End Goals Is A Big Mistake.
- Emotional And Cognitive Biases Are Not Part Of The Process.
- Follow The Trend.
- Don't Turn A Profit Into A Loss.
- Odds Of Success Improve Greatly When Technical Analysis Supports Fundamental Analysis.
- Try To Avoid Adding To Losing Positions.
- In Bull Markets, You Should Be "Long." In Bear Markets – "Neutral" Or "Short."
- Invest First with Risk in Mind, Not Returns.
- The Goal Of Portfolio Management Is A 70% Success Rate.
https://www.zerohedge.com/markets/conviction-or-how-lose-lot-money-investing