Someone went through 10,000 brokerage accounts looking for one thing: which stocks people chose to sell. The pattern was almost perfectly backwards.
Investors sold the ones that had gone up. They held on to the ones that had gone down. Over the following year, the winners they sold beat the losers they kept by about 3.4 percentage points.
The reason is emotional rather than financial. Selling at a profit feels like being proved right. Selling at a loss means admitting we were wrong, so we hold on, and call it patience.
It isn't only money. We quit the job that is going well and stay in the one that isn't. We drop the hobby we are improving at and cling to the plan that stopped working. Same pattern, different area of life.
We don't hold on because it's promising. We hold on because letting go would make the loss real.