Sunk Cost: Why newbie are burning money

by theoneguywiththename

Alright you need to learn how your own two hands work. There is a big difference between having strong hands and watching your portfolio burn for no reason. If you’re going to watch it burn, it should be in a blaze of yolo glory, none of this slow burning weak shit.

There is one big reason you’re letting it burn: Sunk cost fallacy. This asshole is your brain trying to lose you money. Your brain says that I spent a lot of money on this position and lost a lot of money so I may as well hold on to it now. This is irrational. Stop it. The market does not give a shit how much your position cost initially. It’s the reason you stay in crappy relationships longer than you should, aside from the obvious.

Strong hands: being able to weather expected variability within the market without panic trading

Dumb hands: ignoring new clear information that is now available to you because you want to hold a position

When you aren’t sure which is which, ask yourself: Would I still buy this position today, at this current price, knowing all that I know now? Because effectively that’s what you are doing every day you are holding a position.

  • If the answer is yes, hold strong, don’t doubt your vibe.
  • If the answer is no, that means you are only holding onto it because you already have it, get out of that shit.

Obviously there are a ton of other fallacies and biases costing you money, google them. If you’re going to lose money at least lose it correctly.

Positions: SPY 240p 4/17, 230p 5/15. Because people are back to underestimating this shit.


Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.