February 2020 Week 1 - Why You Should Not Fall In Love With Your Stock

This week, I would like to talk about why we should not fall in love with our stock. No matter is it is a good company, bad company, or even a great company.

I have to say; it is easy to fall in love with a stock, in our investment, because it is easy for a human being to be overconfident.

When we fall in love with our stock, we are overconfident. Coupled with the fact that human tends to have the bias of loss aversion, we tend to hold on too long to our losing/wrong investment idea, or we never sell our previously winning/right investment idea even though there are clear signs that it is about to be a losing/wrong investment idea.

Of course, a balance is needed in investment - as with in anything in life. One successful case of me personally is when I sold off most of my GameStop position when I realized then, the fundamentals are deteriorating at a much faster pace than I expected it to be. It was a right call because GameStop fell from about $10 then to currently about $3-$4 range.

Of course, it is only apparent in hindsight. I would have regretted it for sure if GameStop went to $20 after I sold it. But I knew I had to have a balance - and I cannot fall in love with a stock.

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