Introduction
You know that stock sitting in your portfolio? The one you bought three years ago because you really believed in it? Yeah, it’s still there. Doing… nothing. You keep telling yourself it’ll bounce back. Any day now.
Except “any day now” has stretched into years, and while you’ve been waiting, the market’s moved on without you.
This is what investors call dead money, capital that’s essentially stuck because we can’t bring ourselves to let go. And the longer we hold on, the more it costs us.
What “Dead Money” Really Means
Dead money isn’t about stocks that crash. It’s about the ones that just sit there, treading water year after year. They’re not terrible investments, they’re just not doing anything.
Take General Electric between 2000 and 2015. For fifteen years, shareholders watched the stock go nowhere while the S&P 500 doubled. That’s a long time to wait for nothing. And every year they held on was a year they could’ve been growing wealth somewhere else.
That’s the real cost,not what you lost, but what you didn’t earn.
Why We Hold On Too Long
We’re not stupid. So why do we do this to ourselves?
Because selling feels like failure. Our brains are wired to hate admitting we were wrong. Behavioral economists call this loss aversion, we’d rather avoid locking in a loss than chase a potential gain.
Then there’s confirmation bias. Once we’ve decided something is a good investment, we only pay attention to news that supports that view. Bad earnings? Temporary setback. Management shakeup? Growing pains. Market share declining? Just wait until next quarter.
And don’t forget about anchoring. The price you paid becomes your reference point for what the stock “should” be worth. So you wait for it to get back to even, as if the market cares what you paid.
Add it all up, and you’ve got a recipe for paralysis. You convince yourself that holding on is being patient and disciplined. Really, you’re just stuck.
How to Spot Dead Money in Your Portfolio
Not every underperformer is dead money. Sometimes good companies hit rough patches. The question is: how do you know when temporary has become permanent?
Start asking yourself hard questions:
Has this company’s earnings been flat or declining for years? Not quarters,years.
When’s the last time management talked about something new they’re building, instead of defending what they’ve already done?
Are dividends shrinking? Buybacks slowing? Innovation stalling?
More importantly: are there other investments out there with better fundamentals and stronger growth prospects?
If you’re being honest with yourself, you probably already know the answer.
How to Break Free
Go back to your original thesis. Why did you buy this stock? Has that reason changed? If the story you believed in three years ago doesn’t hold up today, that’s your sign.
Look at the numbers. Compare your position’s five-year return to a benchmark. If you’re significantly trailing, the math is telling you something. Listen to it.
You don’t have to sell everything at once. Trim half. Redeploy that money into something you actually believe in. It takes the edge off the emotional sting and lets you course-correct without feeling like you blew it.
Set up regular reviews. Quarterly or twice a year, whatever works. Just build in a forcing mechanism so you’re not making decisions purely on emotion or inertia.
Why an Advisor Helps
Here’s the thing about dead money: it’s hard to see when you’re the one holding it. You’re too close. You remember why you bought it, what you hoped it would become, how much conviction you had.
That’s where a good advisor earns their keep. They don’t have your emotional baggage. They can look at your portfolio and say, “This isn’t working anymore,” without feeling like they’re admitting defeat.
At Stonewater Financial, that’s part of what we do, bring objectivity to decisions that are anything but objective. We help clients cut losses when it’s time and hold tight when patience actually makes sense.
Final Thought
Dead money doesn’t wave a red flag. It just quietly drains your portfolio’s potential while you wait for something that might never happen.
Cutting a losing position isn’t giving up. It’s making space for what comes next.
