The question “Why does a chicken cross the road?” is no joke on the Street; when someone asks, “Why is that stock going down?” the objective answer is, “More sellers than buyers.”
Therefore, if the law of supply and demand– the one thing you can keep track of objectively, the one tool that is devoid of emotion– tells you you’re wrong, it’s wise to accept it. You may think Kodak is going still higher for all those “becauses,” but if that support level gives way in the marketplace and the price falls to 125, don’t fight it. “Can I bear to take yet another loss?” “Suppose I sell and the stock goes back up?” “How can I sell such a nice company?” Can’t you just hear those echoes? But the rule is as applicable to the stock market as it is to real life: Do not rationalize failure.
If you root for stocks in the market game, there is nothing wrong with being a fair-weather fan. The decisive act of selling may turn out , with hindsight, to be a mistake, but the indecisive act of not selling can turn out to be a disaster.
– Justin Mamis, When to Sell
