In pursuit of financial independence and personal fulfillment

I’m probably making a stupid money decision, and I need your help (updated)

Do as I say, and not as I do.

Today, I’m going to confess to a bit of ongoing financial stupidity that I’m fully aware goes against multiple best practices. Let me see if I can sum it up in one sentence:

I’ve got investments I don’t want, with an advisor I don’t trust, because they are too far in the hole for me to sell without angst, and I’m waiting for the market to improve before I sell.


First I’ll break down all the things wrong with that sentence. Then I need your help.

[Update: Thanks for all the thoughts! Here’s what I did.]

I’ve got investments I don’t want …

I’m a low-cost index fund investor. I’ve been that way ever since I fell down the personal finance rabbit hole and found the scads of data showing that passively managed index funds beat out pricey actively managed funds consistently over the long run.

However, I have two ETFs — the SPDR S&P Pharmaceuticals ETF (XPH) and the Energy Select Sector SPDR ETF (XLE) — that were purchased before I really understand that. I got into those funds when my advisor sold me on the “I think these sectors are going to beat the market over time because …” song and dance. He was my advisor, I didn’t know enough to call shenanigans, and so I agreed to let him split a $35,000 401(k) rollover evenly between six funds/stocks he thought would beat the market.

The XLE has an expense ratio of .14% and XPH clocks in at .35%. Compare that to Vanguard’s VTSAX total stock market expense ratio of .04%. They’re more expensive than what I would rather that money be invested in. On the plus side, the do pay quarterly dividends. The dividends pay enough to cover an annual $40 maintenance fee I have to pay to keep the account open.

These funds are not part of my current asset allocation plan, yet I’m still holding onto them.

… with an advisor I don’t trust …

I’ve talked about this advisor before. He is half of the pair of dummies responsible for me mismanaging my investments and missing out on a bunch of growth. I’m the other half.

Ultimately, I’m thankful that we collectively messed up and ignored my investments for years. I never would have gotten this knowledgeable about investing, personal finance, and financial independence had I not been so thoroughly angry and embarrassed by the situation. However, that doesn’t mean I’ll excuse his incompetence.

This advisor also managed other family members’ funds and made more significant moves that did far more to benefit his bottom line than theirs. I got a phone call last month from his admin to set up an appointment to discuss “new developments in the finance industry.” As absolutely entertaining as it would have been to discuss the Fiduciary Rule with him, I decided it would be a waste of both my time and his. (For reasons why the Fiduciary Rule isn’t a cure-all solution, see this USA Today column on one loophole and this Distilled Dollar post on another.)

… because they are too far in the hole for me to sell without angst …

The combined value of my XPH and XLE holdings is $7,440 at the moment. However, I paid $9,400 two years ago. I’m down about $2,000 from what I put in, which means if I sold now I’d have “bought high and sold low.” That’s not a recipe for success.

Listen, I know all about sunk cost bias. I completely understand there are psychological forces at work here making me hold onto something I rationally know is kinda dumb.

Here’s what the charts look like:


The funds are in a brokerage IRA, so A) I can’t sell them and take a loss because they’re not in a taxable account, and B) I can’t shift them over to any of my other existing accounts because I would have to sell them anyway, as those funds aren’t available with my other options.

I either accept my $2,000 loss and move the $7,400 into my preferred asset allocation, or …

… And I’m waiting for the market to improve before I sell

It’s come to this. Classic market timing.

Just like sunk cost bias, I’m well aware of the futility of timing the market. It’s a sucker’s game.

For all I know, XPH and XLE will NEVER be higher than they are today. The prices I bought them at could be high water marks that will never be replicated. Like a band that has a major radio hit and plays festivals and then spends the next 15 years jamming in dive bars — everything looked so good back in the day. It would be like declaring Spacehog the band of the future right when Resident Alien hit the streets.

Sure, that’s a dang catchy track, but it was all downhill from there. They can’t even pay their domain hosting anymore. Maybe I should take Spacehog’s (borrowed) advice when it comes to investing: Sometimes you have to be cruel to be kind.

My plan has been to hold onto these two investments until they get within spitting distance of what I paid for them. Had I sold a year ago and bought VTSAX, I would have gained about $1,100 in the year since, not including dividends. That’s less than $2,000, but a year from now maybe I’ll be on the wrong side of the equation. Or maybe energy and drugs will come storming back like I’ve been thinking they would and I’ll be back at level.

Now you tell me: What should I do?

You’ve seen the numbers, the research, the fuzzy logic and the stubborn reasons I haven’t sold these things off yet. Maybe I’m crazy, or maybe I’m not. How about you help me decide?

If I can get a minimum of 20 people to weigh in on this poll, then I’ll do whatever the majority thinks I should do. Also, I’d love to hear your thoughts in the comments!

[yop_poll id=”-2″ tr_id=”[yop_poll id=”1″]


  1. RAnn

    Are you able to transfer those funds to Vanguard? We had one of those great finanical advisors who invested two IRAs and one taxable account all into the same pot of about 20 mutual funds, all of which have cost us $20 each per account to get rid of. I tranferred them all to Vanguard and we’ve been selling them off a little at a time as they fail to at least meet thier benchmarks. There are even a few we’re reinvesting the dividends in because Vanguard doesn’t offer them and they’ve been performing well.

    Honestly, I’d just dump those two accounts and have it over with–get the money into something else. Just don’t make a habit of jumping from one hot fund to the next.

    • I Dream of FIRE

      My brother tried to transfer securities to Vanguard recently and it wasn’t easy to do. I don’t know if that was just his circumstance, or what. Transferring money was easy; transferring actual shares not so much. So if that were the case the hassle wouldn’t be worth it, especially considering I’d still be in the same boat of having a $2K loss from my original purchase, just in a different account now.

      Whenever I move this money over, it’ll be in a long-term, low-cost broad index fund.

  2. Mrs. Adventure Rich

    Ugh, this is a tough one. I’m in between saying “cut and run now” and “get within $500″…

    The part with the financial advisor bugs me the most. I think I’m leaning towards just cut and run so that they are out of the picture… plus the lower expense ratios elsewhere would be a pleasant relief.

    Good luck!

    • I Dream of FIRE

      Thanks! I know, it bothers me that I’m still technically with him. But at least now he’s not driving the decisions in silly directions. I’d just hate to cost myself half a year of IRA contributions because I don’t like the guy who put me into them.

  3. Steveark

    It is only$2,000. It just isn’t enough money to worry about. Sell it and put it in with your overall strategy. Also get the contact at the desired location you are moving the money to contact your current bad adviser and make the request and you won’t even have to talk to that guy again, ever, good riddance! I inherited a pretty good chunk of investments that were placed with two brokers. One had a quarter million and I left it with him for one year to honor what I thought was his good service to my relative. He lost $50,000 of it in that one year so I called up Betterment and said, can you get this money transferred for me, they did and I never had to speak to him again. He wasn’t dishonest, he just was a cowboy who bet big on oil right before, to the day almost, when it dropped from $100 per barrel to $50 per barrel. So yeah, $2,000 doesn’t sound like nearly as much stupid tax as $50,000 paid by yours truly out of politeness!

    • I Dream of FIRE

      Oh man, that’s a tough one to swallow. You have remarkable restraint not to have had a conversation about that move. You’re right, it’s not a lot in the big scheme. Certainly not going to make a big difference in my overall portfolio.

  4. Sarah.

    Dear Dream,

    I’m in a similar boat with the loss(es) and the fact that they were purchased by my now ex-financial adviser . Our losses are closer to $15,000, over 4 individual stocks and none of them can be claimed for a loss.

    I keep telling myself that I don’t need the money and that I don’t have to withdraw it for many years to come (they’re in a retirement account) but it would be nice to see my money grow. The kicker is that one of them, at a loss of $5,000, is only paying $50 a year in dividends.

    I didn’t vote because I need a survey of my own but I will be reading all the comments and hope that some of them will apply to my situation.

    Your honesty is greatly appreciated. It’s nice to know that I’m not the only one…


    • I Dream of FIRE

      Thanks for reading, Sarah. If we could take the loss at least that would be a consolation, right! I feel like these sectors will come back at some point, which is why I’ve been holding off on bailing out while they’re down.

      Individual stocks can be a much trickier, of course, so you’re in an even trickier spot than I am. I would take your vote anyway. It’s way easier to tell other people what to do with their money! 🙂

      • Sarah.

        Okay, as long as we’re clear that my vote is a case of “do as I say, not as I do”.

        I think I would take the hit and sell. It’s not a lot of money (the loss) and you can make it back in perhaps less time then if you waited for it to come around, perhaps, maybe, maybe not.

        Off to look for a crystal ball…

  5. Steven M Goodwin

    If you feel so strongly that you made a bad decision, cut your losses and get it invested the “correct” way. I did a similar thing with my wife’s 401k. I rolled it over to American Funds in Class A shares where we had an expense ratio of around 0.86% with a 5.25% front load fee… it was nuts. However, I took the loss and transferred it over to Vanguard and have since recovered and the account is worth more now then ever before…

    The most precious thing here is time. You are wasting time waiting for it to come back or whatever if you know of a better investment place to put it!

    That’s my 2c and it’s probably worth just what you paid for it lol!

    • I Dream of FIRE

      Thanks, Steve. I’ve been thinking I need to do that and chalk it up to experience that will make me wiser in the future. I’ll put that on this week’s to-do list and just be done with it!

  6. Melanie

    I voted to cut your losses. Mostly because the market is at an all time high, and if those etfs aren’t following they probably aren’t very good. Also your advisor is terrible and I’d cut him out ASAP. Good luck with whatever you choose though

    • I Dream of FIRE

      Thanks. I’ve got it on my list of to-dos to bail on these. I’ve just got to stop sitting around waiting. The advisor is cut out in every practical way except the need for him to liquidate these shares.

  7. Xyz from Our Financial Path

    Cut your losses and go with what feels right.
    The “wait until it goes back up” argument is the same everyone says about stocks… Just take your money out and do what is right.

  8. Joe

    Get rid of ’em! And start investing with M1 Finance, the only thing cooler than Vanguard. Seriously, the coolness level is off the charts. It won’t matter as much how your investments do because you’ll have so much fun just using the platform! ?

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