Sell What Shows You a Loss & Keep What Shows You a Profit

One of my favorite stories and lessons from Reminiscences of A Stock Operator: Inside Secrets Of The Greatest Stock Trading Genius of All Time.

...My fool efforts to bolster up cotton had increased my line to about one hundred and fifty thousand bales. I may tell you that about this time I was not feeling very well. I don’t say this to furnish an excuse for my blunders, but merely to state a pertinent fact. I remember I went to Bayshore for a rest. While there I did some thinking. .

It seemed to me that my speculative commitments were overlarge. I am not timid as a rule, but I got to feeling nervous and that made me deckle to lighten my load.To do this I must clean up either the cotton or the wheat.

It seems incredible that knowing the game as well as I did and with an experience of twelve or fourteen years of speculating in stocks and commodities I did precisely the wrong thing. .

The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it out. It was an utterly foolish play, but all I can say in extenuation is that it wasn’t really my deal, but Thomas’. Of all speculative blunders there are few greater than trying to average a losing game. My cotton deal proved it to the hilt a little later. Always sell what shows you a loss and keep what shows you a profit. That was so obviously the wise thing to do and was so well known to me that even now I marvel at myself for doing the reverse.

And so I sold my wheat, deliberately cut short my profit in it. After I got out of it the price went up twenty cents a bushel without stopping. If I had kept it I might have taken a profit of about eight million dollars. And having decided to keep on with the losing proposition I bought more cotton!

Reminiscences of A Stock Operator: Inside Secrets of the Greatest Stock Trading Genius of All Time will soon be republished in an easy to read, easy to review format available for purchase and download at Online Stock Trading website, HogsGetFat.com.


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