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Getting Even


Getting even. Who doesn't like to get even, right? There's just something cathartic about it. An eye for an eye, a tooth for a tooth. We've all been there - looking for a sense of fulfillment, or maybe completeness. While I can't tell you if getting even is worth it in life, I can tell you that when it comes to investing, it's completely irrelevant. Don't be lured into investing a sum of money and then fixating on whether your are "up" or "down" from that initial investment amount. Likewise, understand that after we've done it, I pay no attention (aside from tax purposes) to the price we bought a stock. If the value of the stock drops I don't want to be thinking, "I'll sell it when I'm back to even." Or, "I just want to get back to even."

The stock market doesn't care about what's "even" for us, and neither should you. It's impossible for the market to move in accordance with what millions of investors might feel is "getting even." So, instead we ask ourselves if our entire original investment was currently sitting in our wallet as cash, would we buy that same stock today, because in almost every instance, it effectively is. When it comes to an investment portfolio, each day we need to wake up, look at each individual investment, and decide if it's still our best idea for that spot in the portfolio. If it's not, if there's something we now like better, or if the reason we bought the stock is no longer present, then make we need to make a change.

So why don't we make those changes? Why is it so hard? Simple - pride. We don't want to admit that we made a mistake and were wrong. To combat pride, recognize that investing is hard. Even the best investors make mistakes. Just last week, I shared with a client that Warren Buffett lost $5 billion investing in airline stocks last year. Veteran investor Puru Saxena has this to say, "In the investment business, everybody gets it wrong... No investor on the planet gets it right all the time. What matters is how much you make when you are right and how much you lose when you are wrong."

To summarize, eliminate the "getting even" mentality from your investing mindset. Pay no attention to what "even" is and instead seek to position yourself in the best, most promising portfolio each and every day.

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