Cutting Your Losses

One axiom that I have heard countless times is ‘Cut your losses’, but does everybody really find this an easy concept to grasp?

I’ve been passionate about investing in stocks for a good handful of years now. Although this isn’t the main point of this article, it’s one of the first areas that I use this daily.

Cutting your losses is a very hard loaf of bread to bite into. Can you see how it would apply to the question: If you were faced with the decision of cutting off your whole arm to save the rest of your body from being infected with a disease that had a chance to kill you, would you? For me, even cutting off a finger would be a hard decision to make, but in the whole scheme of things, I prefer to live than death; I would cut my losses. I think of Bob Marley, and how he died of a cancer that started in his big toe that he didn’t want to remove because of his Rasta beliefs, or just because he didn’t want to believe it.. Who really knows? This could just be a rumor, but even if it is for him, no doubt there are countless others out there who have died because of this.

Maybe it can also be compared to the situation with a smoker today, or for that matter a drug addict. You know that you’re killing yourself slowly by puffing on that cigarette, yet you continue to smoke day after day. I have not yet met somebody who smokes and wholy embraced the smoking habit and loved every minute of it. It’s inevitable and proven that it kills you slowly, it eats away at your insides (brain and lungs). This, I feel, is an example of not cutting your losses: “I’ve smoked for so long, it won’t hurt to have one more.” Or: “I’ll quit tomorrow.”

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