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How to Rebound From a Bad Investment

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BUT WAIT …. WHAT ABOUT THE LOSS ITSELF?

HOW DO YOU HANDLE THAT?

Now that I have given you my 5 BIG PICTURE SOLUTIONS to overcome your fear of loss, additional tools exist for rebounding from a loss in a single investment.

 

5 TECHNICAL TOOLS FOR LOSS RECOVERY

five fingersHere are 5 Technical Tools for Loss Recovery that I have used as a professional money manager and I know these will help you, too.

 

Selling at a loss is emotionally painful, especially to an investor’s ego when you thought you’d done your due diligence. Despite the agony it may cause, it’s an inevitable aspect of investing that we can make work in our favor.

 

#1, ACCEPT Responsibility and BECOME willing to learn more.

It’s time to be dispassionate, objective, even clinical. Put aside any emotion, guilt, shame, remorse, or emotional undertow. Make it non-personal and become a strategic thinker.

 

#2, Ask probing questions of yourself, your knowledge, and your understanding:

  • Was the loss due to an error in DATA or information you used to make a buy decision?
  • Or was the loss due to an error in your INTERPRETATION or understanding of the data?
  • Was the loss due to an unknown factor announced outside your control?
  • Or was the loss due to larger overall market changes or cyclical patterns?

 

#3, Go back to the Data and to the Charts and re-calculate all data points.

Ask: What don’t I know that the market price is telling me? What risks am I missing here? What rewards are still possible? Is this investment salvageable? Is it better to take the loss and move on?

 

#4, Recalculate your own Risk Tolerance – has it changed?

Check your Tax Gain and Loss status for the year to date. Analyze your ability to absorb a loss vs. gains or against current income.

 

#5, DECIDE: ACTION: SELL, HOLD, OR BUY MORE

You are in control.

image of LynnSell: Take the loss, Move On, and reallocate sale proceeds to a new investment of greater quality. Be more diligent in your process. Learn from this. You will recover a future return.
Hold: Is the investment still viable and measures well against your Quality Criteria? A decision to hold is for more information. Conditional Hold: Consider adding a “Stop-Loss Feature” to give you latitude to hold while establishing a floor against additional price loss.
Buy More: If the loss is due to cyclicality of the markets and warrants purchasing more, this would then become a strategy called “Dollar-Cost Averaging” which shifts a mindset away from seeing this as a “loss on paper” into an opportunity to buy more at a lower price for long-term holding.

 

The good news is that with experience, you get better. Losses become teachers. They become case studies. We learn. We grow. We get better.

 

I love teaching this stuff. Learn with me.

 

May the lessons learned over time ease the pain of loss and greatly reward you with long-term financial freedom and know-how!

 

Here’s to your Financial Health and Wealth!

Join my Financial Clinic For Women – let’s get started today! It’s never too late to grow!

 

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How can you register for the Lynn Kitchens Money Talks for Women Workshop?

 

Attending Lynn Kitchen’s Money Talks for Women Workshop is an excellent opportunity for women to learn more about financial planning, budgeting, and investing. The workshop provides a supportive and encouraging environment for women to ask questions and get answers from an experienced financial mentor and consultant.

 

To register for the Lynn Kitchens Money Talks for Women Workshop, follow the registration instructions. The workshop is open to all women interested in improving their financial literacy. Get on our waitlist now, and get informed of our next Financial Clinic and more! Register Here!

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