Portfolio management

Silly as it may sound ,if you ask any retailer chances are he or she would have sold all
the performing shares and are left with those with paper losses,regardless of the quality
or long term prospects of the counter.This behaviour is particularly glaring in a retreating market like today. Personally,I  have clients who are still holding onto shares bought in the early 1990s ie during the peak prices of the super bull run ...some of the shares are worth a fraction (literally ) of their original cost and worse still some have long been de- listed .Sentiments aside ( how can anyone be possibly be sentimental with stocks anyway ! ),
I suspect the real reason is the misconception that these retailers have about shares...false hope
that share prices will somehow recover to their acquisition price .That futile hope and the belief that there is no actual loss until the shares are sold...The truth cannot be farther..paper losses are real losses (why do
accounting standards require investments to be written down to lower of cost or market ) and holding on
forever can mean tying up whatever remaining capital or a complete write off in some cases..Then there is the opportunity cost of not been able to latch on to better quality stocks unless you have unlimited capital.

A more dynamic and pro active stance would be to allow performing stocks to stay on the books ,allowing for temporary dips as long as the mid or long term trend is intact..This phenomena should be common among
the usual super blue chips ,where dividend yields are fairly attractive or high growth stocks where the contract flows are still ongoing..eg certain O n G counters...conversely highly speculative stocks which are bought during a  market frenzy should be accorded a very short term hold period..Should the "chase " subside and the counter falls out of the radar ( eg out from the top actives ) clear them and take the loss if the
belief is that the game is over and re -enter if there is a new wave ,which may never come in the first place...some retailers have this peculiar belief  that if a stock has been "played" before it will be due for another run later...they fail to understand that if the stock  is that of a distressed company ,the operators or owners would have cashed out and definitely would not  be so charitable taking out the stale bull holders in a subsequent run...