I have a couple stocks in my portfolio brightly colored red. Yet, every time I see them I have stop myself from buying more. The two common cliches that prevent me from doing so are. 1) Don’t Catch A Falling Knife 2) Don’t Average Down. I’ve managed to resist the temptation, and in the past this resistance to my own nature has served me well with two other stocks I used to own, WM and AHM. I took my 20% loss on Washington Mutual and avoided losing another 60%. I took my 50% loss on AHM (American Home Mortgage) and avoided losing everything as the company declared bankruptcy within a few weeks of when I sold out my last shares.

While fortunate in those transactions, my losses also highlight the biggest trap of investing/trading - Falling in love with your stocks. I fell in love with AHM and WM when I should have sold much earlier. I only take solace in that in the end I realized the relationship could not work because the love was not returned. As with relationships, it’s better to cut your losses than try to make an untenable relationship work.

So what do I own today that I need to think seriously about selling? Mylan Pharmaceuticals (MYL) and United Health (UNH). MYL is a company I’ve owned at some point another in some account or another for over 12 years. It’s loved me in the past, but it no longer loves me today. Fundamentally, I should own neither MYL or UNH. I don’t know the first thing about the pharmaceutical or health care industry. I’m not much of a consumer or connoisseur of either.