Written by Katie Gomez

Spring cleaning is upon us once again, the time that we all dread. Spring reminds us that we are approaching the middle of the year, and it’s time to roll up our sleeves and clean to get ourselves back on track. 

As the weather is heating up, so is the market. As with the adage “sell in May, then go away,” the time is now to start looking toward future trades. This time of year is perfect to practice spring cleaning, just like you would do for your home. Spring is a good point in the year to start refocusing your priorities, refreshing your trades, reviewing end-of-year goals, and reflecting on your progress in achieving them. 2023 has flown by so far, and if we don’t pay attention, we may miss out on upcoming opportunities. Springtime isn’t just for cleaning, it’s infamous for being the peak trading season.

Spring is the perfect season to tend to your gardens, plant new seeds, and tend to the ones that have grown, but with that also comes the responsibility of picking out the weeds in your way. However, this concept is not exclusive to gardening. It can also apply to stock trading. Instead of tending to our gardens, we are tending to our portfolios. Just as gardeners see which flowers have blossomed, traders see which trades have bloomed and which have died. So, in the spirit of reflection and rebirth that springtime embodies, it is in your best interest, as a trader, to do some spring cleaning. 

The time is now to reflect on which stocks have turned into weeds and must be let go. Underperforming stocks may seem innocuous on their own, but over time they overtake the portfolio. And, then as they spread, they tarnish your portfolio just as weeds do to a garden. Therefore, you must take the time to reflect on which stocks are doing your portfolio more harm than good and get to yanking those weeds out. 

Once you decide which stocks to sell (weeds to pull), you’ll have that extra capital to buy better ones (plant new seeds) and refocus the direction of your portfolio (garden) like a mid-year reset button. However, deciding which stocks to let go of is easier said than done. 

What constitutes a “weed”?

It is easy for traders to develop an emotional attachment or story with the stocks they trade. Over time, that attachment grows so strong that logic can no longer persuade them to let it go. The confidence we build behind these stories grows so powerful we can’t help but believe it, even if everything else tells us otherwise. That said, once that story (how we think the stock will act) becomes contradicted by the charts (how the stock is actually acting), we have ourselves a weed to pluck. Unless the chart confirms the story, this may be a stock you have to sell. 

Emotional regulation is crucial to spring-cleaning your portfolio to clear the mental energy wasted on these stocks. You must use logic and evidence to pull yourself out of the narrative, cut your losses and move on. You can do this by looking at your profit and loss (PNL)—nothing will shake you back into reality like looking at the money you’re bleeding. 

If your PNL has not been moving in the direction you expected for some time, it is becoming more detrimental to your portfolio the longer you hold onto the weeds. It’s time to let go of the ending you expected and deal with what’s in front of you: pull that weed, sell the stock, and use that money to buy a better one to take its place. With this money, you can learn from this trade and find a new stock’s story to believe in (one with a little more evidence) and choose to start again.

Just like donating that pair of jeans to Goodwill frees up your mental energy along with closet space, selling old stocks offers a return of mental energy lost as well as your monetary return. The more we refuse to sell, clinging to old stories as you watch the PNL trickle lower is mentally draining. Yet, we continue to hold on because it’s familiar, and we don’t want to give it up, nor do we care to admit the story we backed for so long isn’t true. 

Detachment is a huge part of trading. A trader must learn when to let go and move on. Just like we all dread spring cleaning because it means letting go of the past, things you once believed in and still want to. When we let go of jeans from 10 years ago that we’ve been holding onto for sentimental value, we free up space for not only new jeans but new memories to be made. Human beings are sentimental creatures of habit. It can be challenging to let go of the old, safe things we believe in to make room for the new, but it is a necessary part of life to avoid getting stuck in the past.

If you want to move forward as a trader, you can’t keep justifying or protecting old stocks that no longer serve any purpose in your portfolio. You cannot water a weed and change it into a flower. You have to let it go and trust that a better flower will grow in its place. Once you trust this applies to your trades, you’ll see that your portfolio is like a garden, and you are only holding it back when you only focus on the past. The cathartic process of letting go will act as a spring cleaning for the mind, releasing the emotional and financial toll it takes to try and keep this stock alive. 

Most of us dread spring cleaning because it causes us to reflect, review, and release things we know no longer serve us. Letting go is especially hard when a story is tied to it. No one regrets the work of cleaning once accomplished, as we feel lighter and possess a clearer headspace to move forward more productively. Additionally, spring cleaning your portfolio offers even more benefits than cleaning out your closet, providing a boost in physical health (reducing stress), mental health (less emotional attachment/clearer mind), and financial health (freeing up $ to make new trades). So stop procrastinating and get to your spring cleaning. I promise it will be worth the energy.