Will Rogers says and Warren Buffett agrees -
"The most important thing to do when you find yourself in a hole is to stop digging."
From the book: seeking wisdom from Darwin to Munger by Peter Bevelin
Charles Munger says:
One example come from the stock market investment, as when we find that we have invested in a wrong stock and still continuing with that stock in the hope that one day it will provide us better returns, that is wrong. Instead of hoping we should sell all the holding s at whatever price it is and invest that money in some other good stocks,
second example is instead continuing with bad relationship or bad friendship, which have no cure available now, break it start it again from start.
There are many real life situations where we can apply this thought, it will save you from lot of money and troubles.
Thanks & Regards,
Mahesh
"The most important thing to do when you find yourself in a hole is to stop digging."
From the book: seeking wisdom from Darwin to Munger by Peter Bevelin
Merely because you've spent money or time on some project or investment doesn't mean you must continue to spend it in the
future. Time, effort, and money spent are gone. Decisions should be based on
where you want to be. Not where you've been. Base decisions on the present
situation and future consequences. What happened in the past may be a guide
for estimating how likely something is to happen in the future. Ask: What do
I want to achieve? What causes that? Considering what I know today and what
is likely to happen in the future, how should I act to achieve my goal? Will new
money and time invested achieve my goal? Assume I never invested in this and
it was presented to me for the first time, would I invest in it today? If not, then
stop and do something about it.
Charles Munger says:
Berkshire extracted a lot of capital out of it [the textile business] and put it elsewhere. And
if Berkshire had tried to keep fighting the decline of that business with more and more
money, it would have blown most of its capital. There's a time to fight and there's a time
to run away.
One example come from the stock market investment, as when we find that we have invested in a wrong stock and still continuing with that stock in the hope that one day it will provide us better returns, that is wrong. Instead of hoping we should sell all the holding s at whatever price it is and invest that money in some other good stocks,
second example is instead continuing with bad relationship or bad friendship, which have no cure available now, break it start it again from start.
There are many real life situations where we can apply this thought, it will save you from lot of money and troubles.
Thanks & Regards,
Mahesh
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