Why We Cling to Bad Jobs — and Bad Stocks

Cost basis doesn’t predict returns. Tenure doesn’t predict performance. Yet we keep mistaking history for value.

In markets, few traps are as destructive as the paid price bias. An investor buys a stock at $30. The stock drifts to $24. Instead of exiting and reallocating into a stronger performer, they wait, muttering: I’ll sell when it gets back to $30.

This is a mistake. The market doesn’t care what you paid. The stock doesn’t know your cost basis. It will rise o…