Churning of Portfolio

This could be more psychological question. I had been picking few stocks like any Novice will do where look for single digit cheap & popular ones, without looking at any fundamentals. As the learning curve grows we came to know that those are junks and starting to churn the portfolio. Finally we end up in some decent ones, but still we hope some of the remaining ones will become a turnaround theme (I don’t want to be specific lets say Suzlon energy) thinking that it will turn positive.

Question would be What to do with such long term disappointments, or the ones you bought when you were complete novice especially seeing new opportunities in the market. Do we need to churn and book loss and buy a new idea.

Also, in the bull market there are lot of new themes come around and you will easily get tempted to get rid of the laggards in your current PF and go for the new horse. How to go about it

No simple answers here; as you rightly pointed out, sunk cost fallacy plays a large part in our decision making process esp in ‘junk’ or ‘expecting turnaround’ /‘disappointment’ cases. You may be better off selling all the junk (irrespective of losses/gains that you may be sitting on) and take a fresh look at rebuilding a concentrated portfolio to start with, comprising good quality companies. If some good names are already part of your holding, perhaps get started by allocating more to them by selling others.

Would also urge you to look at reading books on Behavioural finance to help you in this process. Best wishes in your journey.