If a stock tanks, it's the market's fault. Focus too much on past performance. Just because a stock soared yesterday doesn't mean it will be a world-beater tomorrow. Analysts say it's highly unlikely Cisco can sustain that pace. Still, many investors confuse today's Cisco with the Cisco of the early '90s.
People hate to admit they made a mistake.
We don't want to admit that we were wrong and take a loss. The hope is the stock will turn around. Most people have an aversion to feelings of remorse, says Meir Statman, finance professor at Santa Clara University. Few investors, he says, want to admit they made a lousy investment. Think they have an information edge.