Dear CommonStock community,

As we embark on a new year, I wanted to share some thoughts on an idea that can help all of us become better investors: letting go.

It's only natural for us to become attached to our investment choices, especially when we've put careful analysis and due diligence into those decisions. However, clinging too tightly to those picks can cloud our judgment and prevent us from making objective assessments when the facts change.

The reality is that no investment thesis holds true forever. Competitive dynamics shift, markets evolve, and even the best companies stumble at times. When our original reasons for owning a stock are undermined, we owe it to ourselves and our portfolios to re-evaluate with an open mind.

Letting go allows us to exit underperforming positions and redeploy that capital more effectively. It liberates us from sunk costs and the temptation to average down on declining stocks. Most importantly, letting go frees up mental bandwidth to focus on the full range of current opportunities, rather than dwelling on past mistakes.

None of us like to be wrong or to realize losses. However, the investors who consistently outperform are often distinguished by their ability to change their minds. They follow the evidence where it leads, quickly cutting losers and moving on.

As we start fresh in a new year, I encourage all of us to reflect on where we may be clinging to losing positions, outdated theses, or inertia. Letting go of those tendencies will open our eyes, minds, and portfolios to better possibilities ahead. Wishing you all the best for a successful year of investing.

Sincerely,

Dissecting the Markets

Photo by Agto Nugroho on Unsplash