I'm always preaching investment advice to people I know. Invariably I'll be having lunch with someone and even before the food shows up I'm going on about how to avoid making one or more investment mistakes.

One of my biggest pet peeves is holding on to a loser investment too long. Time and again I hear the sob stories about the stock that went up briefly and then tanked. The so-called investor, a.k.a. deer in the headlights, then freezes, hoping the stock will rebound. Too often it continues to fall, or does nothing at all, and our investor friend continues to lose money. These are the kinds of things that cause us to under perform the market.

But today my story is about another kind of under performance. Today I want to tell you about another investor who has seen tremendous gains in one of his investments, but who nevertheless is frozen in place, unsure of what to do.

I call it the kind of problem we all want to have. He bought Microsoft many years ago. His Microsoft holdings are worth something in the middle six figures. His problem is that his holdings aren't appreciating. Microsoft's stock price hasn't done much of anything for a very long time. He thinks he wants to sell his position, but he's afraid if he does he might lose out on future appreciation. He also is adverse to selling because of the hefty capital gains taxes he'll have to pay.

Yes, those are the kind of problems we'd all like to have. Isn't it amazing that it doesn't matter whether you lose a lot of money on a stock or gain a lot of money on a stock, you still have problems to contend with? It makes me wonder if this might be part of the explanation for the mediocre returns most everyone gets.

My response to my lunch companion was that if he held on to a stock - any stock - that he felt was going nowhere, he would be giving up the appreciation that money might find in a growing stock. The amount of that appreciation is the goal to keep in mind. It's that appreciation which will offset the taxes he'll pay on the capital gains from the sale of his Microsoft stock. Of course it would only help matters further if he had one or more loser stocks to unload to help offset some of those gains too.