I Could Never Sell

A novelist could tell us why people hold losing stocks and sell winners.

No, not regret or fear of regret. If you’re the regretting type (as the odds would indicate), you feel regret either way, and in your own way.

You feel regret for you and your story, perhaps, not just for your money.

You feel more regret for the ongoing loss (holding the loser), perhaps, than for the over-and-done-with loss (selling the loser), because every day it whispers something about you, you imagine.

Likewise you can make payments with interest on your regret or pay it off. Those who don’t figure the time-value of their money might still figure the time-value of regret, having more experience with regret than with money.

First the short answer. Selling is doing, holding is not. Doing makes a story, not doing does not.

Our quirky investors are not maximizing gains or minimizing regrets, they are telling a story. Their story.

Selling makes news. Not selling does not. You won’t hear this in their (or any) story:

Then one day I had had enough. Somehow I knew. Things could not go on this way. And so I summoned myself to do what I had only dreamt till then: I held that losing stock.

Charles Baxter explains this well. He teaches fiction workshops to bright college kids who know little or nothing of the late Richard Nixon, but who still tell their stories the way Richard Nixon told his.

In Burning Down the House (Essays in Fiction), Baxter quotes Robert E Lee for comparison. Deciding time was not on his side, Lee mustered all the best the South could offer and took the fight to the North. After three days of heavy fighting at Gettysburg, he again decided time was not on his side, and sent twelve thousand of his best remaining men at the center of the enemy lines. After a bloodbath there, fatal to that day and to all the years of war ahead, he said:

All this has been my fault. I asked more of men than should have been asked of them.

Then Baxter quotes RN: The Memoirs of Richard Nixon:

From a combination of hypersensitivity and a desire not to know the truth in case it turned out to be unpleasant, I had spent the last ten months putting off a confrontation with John Mitchell.

We could say many things about this and miss the point.

Delay and fear of regret? No. Worse.

For delay and fear of regret, see Lincoln’s generals after Lee forced a verdict and lost. Lincoln replaced general after general as each delayed, declined to pursue, and dodged further confrontation. Why, with an easy win now in sight?

Like our investors, Lincoln’s generals were not maximizing gains or minimizing regrets, they were telling a story. Their story. What would history say of a general who lost an easy win, a sure thing? Better to lead Pickett’s hopeless charge at Gettysburg, and die bravely, than pounce on Lee’s broken and fleeing army and fail. Trained in the history of war, they preferred the one story to the other.

Back to Nixon.

In this passage Nixon acknowledges weaknesses and confesses failings. But not the one we are looking for. Not the one the Senate charged him with. Not an offense, not even a failure, but failings.

Richard Nixon invested his last decades in these memoirs. For the rest of his life Nixon built the story of a Nixon who knew more, dared more, and did more than others of his time. But here he muddles that story. Here he waits in fear to find out what others have done to him. In this instance, a man he appointed, a man who answers to him, a man who serves at his pleasure.

“I didn’t do it” makes a dreary story, not a story people tell and retell. “What did I do?” is worse. “What have they done to me?” is worse again.

Nixon may have muddled his story into oblivion. Squandered his investment. This is Nixon holding his losers.

Nixon dumping his losers and building his winners, what would that sound like? Something like this:

I destroyed everything I cared about with that spying thing, and I trace that spying thing to something wrong in me from the beginning, something I could never completely rid myself of, and still can’t name. I sometimes felt like a cockroach hiding in a hole, even in the White House. How could I imagine the cover-up would succeed? It was more of the same, just the spying in reverse. Dread? Fear of betrayal? Whatever you call it, in the end I let it destroy all that I was fighting for…

Now that’s a story we would read and retell.

Baxter sees many such muddled stories. These are not stories anyone will remember the way we remember the story of Pickett’s Charge. These are dead stories, stillborn, forgotten even in the telling.

Baxter suggests the muddle is no mistake. Like the ink a threatened squid pumps into the water, the muddle is a strategy of self-defense, where the self has wandered onto the firing range, because writers have mixed their own story into the story they tell. Often unknowingly: the muddle has blinded its writer too.

Same advice to writers as to investors, brokers, fund managers: leave your own story out of it. Even in a memoir, the story of your life and times, keep your eyes on your reader and your cause, and off the face in the mirror.

Where else do we hear these muddled stories? From the witness table at Congressional hearings, when the Executive branch is called to account. Disavowals, Baxter calls them, built for deniability. The storyteller wants to bore you to death. He doesn’t want to make news. He doesn’t want you retelling the story to friends all the next day. He wants all this forgotten. The storyteller says “I don’t recall” hypnotically, inviting you to nod off. He wants maximum muddle, a story dead on arrival.

As might an investor with a losing stock. Anything to kill the story. Selling is news, holding is not.

When sell you must, sell later, not sooner. By then your news is old news: “Just cleaning up a mistake I made way back when.” Like the way the White House releases bad news late Friday night before a long holiday weekend, when (they hope) no one is looking.

If Lincoln’s generals and Richard Nixon can make this mistake, and, distracted by the face in the mirror, lose sight of the fight, so can we…