"You Haven't Lost Money Until You Sell" & the PP

[barrett]

The old stock owners refrain of "You haven't actually lost anything until you sell" was always a hollow argument for me. It kind of implies that people live forever and that the stock market has to continue its long, generally upward trend. A Japanese stock investor with this "stick to your plan" mentality 25 years ago would still find themselves way poorer than they were in 1990. Anyway, I was just thinking yesterday that this attitude doesn't have much of a place in the PP. Do others feel this way?

I guess I only feel as wealthy as my balance sheet tells me I am at any given time, and no amount of mental gymnastics can change that.

[hoost]

I think this is where the idea of holding investments that generate cash flow comes back into play.  If your investments are paying you on a regular basis, then who cares what the market tells you they are worth?  If they are not paying you, then the only way to get money out of them is to sell them, so you might very well care what the market says they are worth.

Treasuries generate some of this cash flow.  Maybe it's worthwhile thinking once more about a dividend growth strategy in the stock portion if it helps with the mental part.  The fact that the assets tend to bounce around mostly uncorrelated also helps to isolate the PP investor, so maybe it's a non-issue.

[stuper1]

I think "buy low, sell high" always applies.  The PP has that idea baked in with the 15/35 rebalancing bands, which keeps you from selling losing assets until they turn around and become winning assets.