Forget What You Paid for that Stock
By David Futrelle

(MONEY Magazine) – Maybe hiring a quack to erase the memories of an ex-girlfriend wasn't such a smart move for Jim Carrey in Eternal Sunshine of the Spotless Mind. But most investors would do well to cultivate a little amnesia. Why? Fixating on the price you paid for a stock in the past--a textbook example of what psychologists call "anchoring"--makes it harder to evaluate the stock in the here and now. That's especially true if the stock has turned out to be a stinker, and if, like most investors, you're disinclined to admit you made a mistake by buying it in the first place.

Forget your history with the stock. Forget trying to "get back to even." Take a step back and ask yourself: If I didn't already own this stock, would I buy it today at its current price? If so, stick with it. If not, don't waste your time wishing and hoping and thinking and praying for it to come back. Just take the loss--and forget about it. --DAVID FUTRELLE