Negative value

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By Eric J Gruber

Published on: 2020-06-20

You got to know when to hold ‘em,

Know when to fold ‘em,

Know when to walk away,

And know when to run.

— Kenny Rogers, The Gambler

Recently my financial advisor called me and let me know about how my investments were doing.

A few of them aren’t doing well at all. In fact, they’re losing money regularly. There’s no sign that they’re going to get better anytime soon, and I was asked, “Would you like to keep holding onto them, or do you want to invest in something with a better return on your money?”

Man, that’s a tough call. I mean, I’ve poured a lot of money into all my investments, even those that are losing money. I don’t want to face the reality that I may have picked a few bad apples, but I’ve put so much into them. Should I go ahead and keep them, or take a chance on something that could produce a better return?

OK, I have to admit something: that story didn’t happen.

But I have been thinking a lot about negative value lately. However, I haven’t been thinking about it with money, but rather with regard to people.

If someone actually had come to me and said, “This thing you’re investing money in, it’s losing value all the time” then I’d have to consider what my next course of action would be. The way I see it, I would really only have two options:

• Stay the course. It’s possible that the investment will make an about face, and the returns will start moving in the right direction. All I need to do it wait it out. After all, you might have heard the phrase “Past performance is no guarantee of future results,” and just because something is in the toilet today doesn’t mean that it won’t rebound in the future. Apple was on the verge of bankruptcy in 1997 before Microsoft stepped in with a last-minute investment that saved the company. Today Apple is one of the most valuable companies in the world.
• Know when to fold ‘em. Kenny Rogers said it best. You have to know when it’s time to throw in the towel and move on. Sometimes, you get to the point that you realize you’re not going to get your investment back. It’s gone, and the longer you hold onto it, the longer you push off admitting that you invested in a stinker, and there’s no coming back. This is also called the sunk-cost fallacy, and honestly, it’s a hard pill to swallow sometimes. But sometimes you realize that past performance is no guarantee of future results, and there’s no guarantee that you’re ever going to get your investment back.

But again, I’m not really talking about money here. I’m talking about people.

Sometimes, you invest so much in a relationship with someone, it’s hard to admit that you’re not going to get out of it what you put in. This is difficult, and painful. How can you just walk away after all the time and effort you put into someone?

I’ve seen this play out with people I care about, and I always give the same advice: ditch the people that drain you, and find others to invest in instead. There are people who add tremendous value to our lives, and those people are worth holding onto. But when it comes to people with negative value, people who that add no benefit and are actually costing you in energy, stress, worry, and depression, you need to think about how long you’re willing to hold on.

Is it time to cut your losses on a chance for better return on investments elsewhere?