Expect to Win, Plan to Lose

Expect to Win, Plan to Lose

All week we've told you how to get your financial house in order...

From where to park your emergency fund to how to boost your income every month... we've given you lots of ways to win the financial game.

But you also need to plan for losing...

As investors, the losses that we take hurt much more than the good feeling a win will bring.

This is what's known as "loss aversion."

We've all held a stock that's headed down. And we've all – at some point or another – kept holding, hoping to break even. "If it could just get back to my buy price, I would sell and move on."

That whole time, you've got your capital tied up in a stock that the market has soured on. Meanwhile, other stocks are shooting up left and right.

Believe me, the dollars you earn by "getting even" are no more valuable than the dollars you'd earn by switching to the stock of a better business.

You should cut your losses and move on... But many investors simply can't do that. They become emotional with stocks that turn into losers.

It's not just you. It's built into our brains. And it's hard to let go.

In a study by Terrance Odean of the University of California, Davis, an analysis of 10,000 individual brokerage accounts found that investors held losing stocks for a median of 124 days versus a median of 102 days for winning stocks.

We're too quick to sell winners lest we give back some of our gains. And it costs us money.

Good investors have to stay rational in the face of a down stock... But we're humans first, investors second. We simply can't be trusted to keep our emotions in check.

Of course, the trick is knowing when to cut losers and when to let your winners ride.

In a few days, my friend and CEO of our corporate affiliate TradeSmith, Keith Kaplan, is unveiling a system that takes all of his company's previous work to the highest level yet.

He tested this system on and found that 5,000 different stocks have their own "green day" – the date when the stock is most likely to shoot up.

Keith will reveal exactly how this system works on January 8. But you can start testing it for yourself – and reserve for spot for the big unveiling – right here.

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
January 4, 2025

Reader tip of the week...

*** I am an 87-year-old male U.S. Coast Guard veteran. My father also had Raynaud's, but in his toes.

I first experienced it with my middle finger [both hands, usually] when I was 25 years old. At that time, I was a Lieutenant in the USCG assigned to Reserve Officer Training at Yorktown, VA. Base is on the Southern bank of the York River. I was teaching Seamanship, which included small boat handling in power boats at the river waterfront throughout the year. In winter. In the Virginia cold, I would be on the small boat with the under-training Reserve Officers, demonstrating aspects of small boat handling, then coaching each trainee as he [before women in the ranks] practiced various evolutions. Each session would be about two hours with four or five trainees.

When I first experienced Raynaud's, I tried massaging my hands, putting them in warm water, shaking them [to force blood down into my fingers] etc. Nothing I tried was effective. What finally DID work FOR ME was that I needed to keep the back of my shoulders warm [all across my back from back of my neck to upper middle back]. Dressing warmly with special attention to keeping this area from getting chilled worked for me.

I have sporadically experienced Raynaud's since, always in cold weather, but I am usually dressed appropriately, so it was only sporadically. Cure was not the answer for me, PREVENTION was the way! – C.G.

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