What to do when you realise that your investment barks like a dog
Tuesday, 14 April 2026
Martin Hawes is a financial writer and presenter, and has written 25 personal finance books. He writes a weekly column.
OPINION: The biggest investment mistake that I ever made was quiet. So quiet, in fact, that I never knew I had made it until about 30 years later.
I had purchased a section and bought it cheap. The idea was to build on it, but I got an offer for the section that meant I nearly doubled my money in the space of a couple of years. Taking the offer seemed a good thing to do at the time.
Decades later I was talking to an old friend and I mentioned the section and its sale. He raised his eyebrows and said that if I knew current prices in that area I would probably wish I still had it.
He was right. When I did some fairly conservative numbers, I calculated that if I had continued to own the section I would have had a return of about 12% a year for decades. I cannot remember what I did with the proceeds from the sale but doubt very much that I would have done any thing like as well as that.
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Most investment mistakes are a bit more obvious and a lot faster. They are noisier than my section sale – and the noise that you hear is mostly your own wailing and gnashing teeth.
Although my mistake was selling decades too soon, I suspect that more people lose more money by holding on to poor investments for too long.
Probably the most common investment loss is when you buy and the investment quietly languishes; it does not go up as expected but sinks and fades in value.
When considering an underperforming investment, you have to take a long, hard look at this investment to see what has changed to lead to its underperformance. If there is no fundamental change you should take courage from your assessment, be patient and hold on.
However, if there has been some underlying change (perhaps the industry that the company is in has changed, or some of the key people running it have left) then you should be out of it– the thesis that encouraged you to buy the investment no longer stands.
You need to think back to why you invested in that company’s shares. You have to be honest with yourself and own up – perhaps the thesis never was valid or, if it was once valid, maybe it no longer is.
Sometimes you just have to admit it: you have bought a dog.
The question then arises: what do you do with this dog of an investment? The most important thing is that you do not anchor yourself to what you paid for it.
Over the years I have heard many people who have bought bad investments say things like, “I bought these shares for $2.10 each; they are now $1.60 and a terrible investment. I will sell them when they get back to $2.10 and good riddance.”
Such people are focused on the past (what they paid for the shares) and not on the company’s future prospects. They have anchored themselves to their purchase price.
Warren Buffett once commented on people like this, saying you don’t have to make it back the way you lost it.
What he means is that the thing that lost money probably won’t get it back for you – once a dog probably always a dog. If you watch what Buffett does when he makes a mistake, you can see that he is ruthless. He does not grimly hold on hoping against hope; he admits his mistakes, sells his poor performers and gets his money working hard in other things.
Buffett is famous for many things but one of these is his humility and the way he owns up to his mistakes. Shares in airlines, shares in IBM and Tesco Supermarkets have all been declared mistakes by Buffett and coldly culled.
What you paid for a failing investment is irrelevant – forget your purchase price. The only thing to think about is how the investment is likely to perform in the future. The past (what you paid for the investment) no longer matters.
Making a mistake is human but letting a mistake continue for months and years is to break a cardinal rule of investment. The important thing is to own up to any mistake, whatever it may be – you cannot manage it unless you know it for what it is.
Get your money out and invested in something you expect to be good instead of leaving it in something you know to be poor.
Martin Hawes is not a financial adviser, and the information and opinions here should not be taken as financial advice.