Lesson Learned: Losing hurts

A person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise.

Daniel Kahneman

Losing hurts. It really hurts. It hurts about twice as much as gaining the same thing. One of the ways this can manifest in investing is that we hold failures for far longer than we hold the winners, because it hurts too much to crystallize the loss

Ways to manage this: 

• Revisit the original reason for making the investment, and see if it’s still valid. 
• Has the business situation changed? Is it likely to recover? Or are you on a sinking ship?
• Should you wait it out? Or get out?
  

The wiki into Loss Aversion has lots more information about this topic.