Love is a great thing in life, but it does not belong anywhere near your investments. It is only human nature to latch on emotionally to a stock, especially one that has been making money for you, but this can be disastrous to your financial health. I was tinkering around researching some returns for highfliers during the internet bubble and then followed those returns until the present day. What I found was pretty shocking and illustrates the point perfectly.
The Chart
They say a picture is worth a thousand words, but this table is worth a few million (in losses to those who held onto some of these stocks). 1999 was the last full year of the mania that gripped the world where cab drivers were
investment gurus and value investors were laughed off of Wall Street. Startups with nothing more than a webpage were going public and given huge valuations. We all know how it ended.
So what is my point of showing this chart? It is simply never to fall in love with a stock and to keep all emotion out of investing. Imagine somebody buying Yahoo! (YHOO) in 1999. It was easily one of the hottest companies on the planet at the time and it soared that year, not to mention in the previous years. I bet many investors started to love it as it soared to new heights and vowed never to sell it. It has lost almost 90% of its value from January 1, 2000 to the present day. How many investors kept averaging down thinking they were getting a bargain?
Note that the third column is the cumulative return for 11 years! It has been that long and most of those stocks (except for Apple of course) aren’t even close to their highs, and some of them may never get back there. Meanwhile,
those who left emotion out of the equation no doubt had no trouble selling a big winner and looking for greener pastures. Unfortunately, there are probably far more who still hold many of them clinging to hope that they will
rebound strongly. It’s been 11 years, perhaps one day.
Falling In Love? Better Not Be With A Stock is an article from: 
