The Waiting Game
One of the hardest parts of investing is not doing anything at all. You need to wait for your investments to compound over time. The problem is the narratives that surround your investments. Adding more uncertainty, unexpected "black swan" events like wars and COVID can scare investors into thinking they know what's going to happen next.
I am not against actively managing your portfolio. Sometimes, we need to consider new information that changes our theory for why something will be a solid investment. For example, if a company is hemorrhaging money and not showing any signs they will turn it around. But there's still a chance they might figure it out some years down the road.
There is a gray area of investing where risk meets reward. You can choose to stick with an underperformer. If the company eventually dominates their sector and takes market share, leading to profits then you'll be rewarded. More risk, more reward. I personally like to include a few speculative plays in my portfolio, but honestly it doesn't ease your nerves to watch a company you own struggle to reach profitability.
My most profitable investment that I'm still holding, Tesla, falls into this category. I thought the world was destined to have an electric vehicle future before many saw the writing on the wall. Before the company turned profitable, I bought a bag of shares with intent to hold for a long time. Luckily, they turned their first annual profit in 2020 and continue to improve their results.
So far, the EV theory has paid well and the electric vehicle movement shows no signs of stopping. This story is an example of how you can invest on what you think the world will look like in the future, even if the situation is questionable in the present moment. Just know that it might take longer than you think to play out, or you could be wrong and it never plays out. The friction of this uncertainty in the outcome is what makes investing hard. Sometimes, there are simply better options to reallocate your losses into another more promising company that already has established a sound balance sheet.
I propose that many times, but not always, the best action is not to make any moves. You've got a large unrealized loss, but how do you know that market volatility won't swing the other way on your position? If you believe the company will be important in the future, hold.
Investing is tough because it's easy to be convinced by a stranger or talking head online that they know what's going to happen. More often than not, it's best to play the waiting game. Extend your holding period and the likelihood you'll profit increases.