KYRIE717, Thanks, no problem.
Totally agree with your reasoning. Learning to cut loose one's "losers" is as much a part of real "investing" as is learning to take some profits off the table on one's winners as Ellsye has discussed (other than perhaps in the case of Blue Chip dividend payers, where one might hold them a lifetime through ups and downs, simply to collect the ever increasing dividend, aka the Warren Buffet model essentially- but even Warren the Sage will sell his "loser" position sometimes, aka stocks that hit his stop-limit parameters or face shrinking profits, risk of no more dividend growth, etc).
Interestingly, just as you described, even Warren Buffet will often "cut loose" a loser or under performing position just for the very reasoning you described- "re-deployment" of capital to BETTER PERFORMING POSITIONS. There is something as real as "capital losses" (aka when a stock goes down and you lose money) and that's known as "lost opportunity costs" or "capital opportunity costs"- businesses live and die by it all the time, as do successful investors. A perfect example would be holding a loser such as OCATA/ACTC since the 2009 time frame to present period, when the shares have grossly under performed the overall markets. One could have stuck their capital in almost any index or similar fund (say S&P 500 fund) during the 2009 period to present- and made nothing but bank. So when calculating real losses- one must include what they "would have made" on that money in a "safe" and nearly "sure thing" investment, and add those "lost opportunity" costs to their real capital losses, as in the case of OCATA/ACTC.
OCATA/ACTC being an OTC stock most of its life (Born of the KACHINA in a "poor man's" reverse merger straight to the OTC penny markets) of course has made it nothing much more than a high, high risk speculation stock and really a gamble at best IMO too.
I'm pretty much a "numbers guy" with a strong background in certain fields that gave me a lot of mathematics training and probability and stats, etc. So when I see numbers presented- I immediately (just as habit) run quick mental calculations to see if they make just "common sense".
Example: When I see "200 shareholders and 11.7 MILLION shares owned" for (followed by the claim of 45,000 other common retail shareholders for example) - my math/analytic side of the brain perks right up and just fires up automatically; I pull up my on-screen calculator (I can do the basics in my head of course) and I "run the numbers" and of course they come out the other end of the equation looking 100% BOGUS or fabricated to me, LOL!! Just no common sense behind them or they just don't "add up" from a science/analytic/sampling stand-point.
I at one time did a lot of a particular type of probability/statistics work that's known world-wide for use in quality control systems for things like manufacturing, product quality control, really for any process control. These methods can even be used for "non engineering/non science" applications such as Citi-bank for example, perhaps wanting to shorten the length of time it takes to get their accounts receivable money collected. There are science based probability/stat methods that Citi can/could use (they've actually done it, it's a classic case study in the Harvard review) they could use analytic methods to examine their "process" (everything in life/business is a "process" in the end- steps, steps that must be taken in a certain order to get an outcome) and they could then determine steps that could be eliminated or improved on and for example find they can shorten their avg accounts receivable time from say 45 days to say 26 days- which for a company their size, is an ENORMOUS amount of cash-flow being generated, which they can then deploy to other things like growing their business, etc. Same for Amazon, same for Walmart's legendary inventory control processes- all built using the methods of probability/stats.
These same methods were used by NASCAR pit-stop teams as just another example. Reams written about it- in Harvard review and other places for example (entire business process are now evaluated/improved on using "The Pit Stop" method). Go back 20, 30 years and see what an "average" NASCAR pit-stop time was. Then watch one being done today- and ask how they can change all 4 tires, gas the car, adjust the steering and perhaps air "down-flow" pressure, tweak the car height off the ground- and do it all in about 11 seconds. (Hint, in the 1960's they did about 20 less steps than they do today on each stop, and it took about 45 seconds on average). They used scientific methods, probability/stats and process control analysis to get it to today's 11 seconds. NUMBERS, ALL NUMBERS and "process control". Works every time and everywhere it's ever applied.
These methods are applied to any "process control". The system was pioneered at firms such as GE and then Motorola (An engineer named Bill Smith at Motorola and championed by Jack Welch during the massive growth, go-go days of GE under his tenure, basically about the mid 1980's) and also ties in closely with quality methods/process control perfected in Japan based on the work(s) of people like William Deming for example.
The training involves a condensed, high power course that corporations now send certain people to- and you basically get about a massively time compressed Masters level degree course in probability/stats/quality/process control methodology in about a 6 month period and then must apply it back at the operations level and then train others to use at the facility/plant/company, whatever.
Once you've studied those methods- you never look the same at numbers based info again. I can spot a "study" (such as a medical trial) or a "poll" or a claim of a "sample" (the 200 supposed shareholders for example) and I can almost instantly detect the BS in it if it exists. That goes for things like the "daily news" or magazine articles, company SEC filings/financial statements- anything where they make claims about a "sampling" of people or "a study said" or "our revenues were X, but our expenses were Y, but we lost Z", etc.
Similarly, I can design a "study" or a "poll" that will look 100% "scientific" and look highly "credible" and real- and I can probably do it to GIVE YOU ANY RESULT or ANY ANSWER YOU WANT IT TO SAY for its outcome. And it would take someone else with a similar background to properly dismantle the data and prove it's bogus, as in "GARBAGE IN, GARBAGE OUT" but "good looking" and very "scientific" looking in the assertions being made, the spread-sheets and graphs and all "presented", it would look real good, very "credible" on the surface.
So, all I do is "call it like I see it" when I see these numbers/polls/samples such as "THE MAJORITY of 45,000 retail shareholders say blah, blah, blah"- and thus my immediate reaction is PROVE IT and SHOW ME THE DATA to support such a broad based claim, LOL !! Of course, in most cases, there is no credible data or supporting info for such claims.
You gotta do what you gotta do. Re-deploying capital, even if it means taking a capital loss, I think is good smarts in many cases. I've certainly done it more times than I can count over the years. I "carried forward" that tax loss on my taxes, in some cases for YEARS, taking the annual $3K portion that is deductible, and then BAMMO, I hit a winner and had some large capitals gains, and used that loss to finally off-set some large gains. It's a 100% legit decision IMO.
Good luck on that "capital re-deployment", in other words, PICK A WINNER HOPEFULLY or a basket of winners !
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