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.

READ  Shedlock: Spending Surge Coming With More Stimulus Money

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.
READ  Top Money Hacks For Financial Freedom

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.


Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.