[marvin]

Maybe he invested 2% of his net worth in Tesla at the IPO, was determined to hold the shares for at least 10 years until they executed on their vision, and has been too stubborn to sell until now.

Re-balancing your portfolio after things have started to go very, very well is certainly sound advice, and so is selling all your equity in a promising startup the moment it has significant market value (it will most likely still be worthless).

[freerobby]

Yeah, this is closer to how I got here (cost basis is way more than 2%, but nowhere near 25%). As you hint at though, there's a cognitive bias in holding my position by this reasoning -- my gains are a "sunk benefit" and I am where I am regardless of how I got here.

For me, it boils down to two things:

1. I'm pretty conservative with the rest of my money (index funds, rental property). If Tesla went bankrupt tomorrow, I'd be fine. Don't get me wrong -- it'd be a bad day. But the financial hit wouldn't threaten my long-term happiness.

2. I only buy individual stocks when I feel the market has wildly misjudged a company. Tesla fit this to a tee, particularly (but not exclusively) in the early days. I took a large early position and have been buying dips along the way (yes, still). By my judgment, a dollar invested in Tesla still has a much higher expected value over 10 years than a dollar invested in any other equity that I feel qualified to assess. I would love to diversify the highly aggressive part of my portfolio, but hard as I try, I cannot find a deal this good in any other public company. So I've decided how much I'm willing to lose on what I believe is a great bet, and have invested accordingly.

[marvin]

I agree with your reasoning.