Instead of passively holding an investment, view it as an active choice to buy it at its current price every single day. The decision to sell should be based on a clear analysis of the incremental forward rate of return versus deploying that capital elsewhere.

Beyond yield premiums, illiquidity imposes a major opportunity cost: the inability to rebalance. When one asset class soars, liquid investors can sell and reallocate to cheaper assets. Heavily illiquid investors are stuck, forfeiting valuable strategic portfolio shifts.

The temptation to switch to a shiny new opportunity ignores the significant head start you've built. Even if the new venture grows faster initially, you lose years of compounded knowledge and progress, leaving you behind where you would have been by sticking with it.

Forcing investors to hold concentrated positions due to tax friction increases idiosyncratic risk and raises the economy's overall cost of capital. From a public policy perspective, this creates significant deadweight loss and market inefficiency by preventing capital from being recycled into smaller, growing companies.

Like a starling leaving a thinning food patch, investors should sell a stock not when it disappoints, but when its marginal rate of return falls below the average of their next best alternative. This applies a simple opportunity cost calculation to avoid emotional selling decisions.

While tax implications are important, they should not be the primary driver of an investment decision. The fundamental quality and suitability of the investment itself must come first. Choosing an investment solely for a tax benefit, without considering its core value, is a flawed strategy.

The allure of a "better" opportunity is deceptive. By switching, you abandon years of accumulated experience and momentum. Growth is easier when you're established, meaning a new venture, even if growing faster initially, will likely never catch up to your existing trajectory.

Suboptimal selling is often driven by fear: a position gets "too big" or you want to lock in gains. A better approach is to only sell when you find a new investment you "love" more. This forces a positive, opportunity-cost framework rather than a negative, fear-based one, letting winners run.

Shifting capital between asset classes based on relative value is powerful but operationally difficult. It demands a "coordination tax"—a significant organizational effort to ensure different teams price risk comparably and collaborate. This runs counter to the industry's typical siloed, product-focused structure.