This finance prof bought Nvidia at USD$0.48/share — but he sold early and missed a life-changing gain of more than 30,000%. Here’s his big mistake and how to avoid it in 2025

The biggest reason for investor mistakes

When Nadler was starting his teaching career, he wanted to gain some hands-on investment experience to share with his students. As a result, one of his earliest investments was stock in technology company Nvidia (NASDAQ:NVDA)— about USD$800 to USD$1,000 worth of stock. He paid approximately USD$0.48 per share.

After holding them for a period of time, Nadler noticed that the shares had earned a decent profit so he decided to sell a large chunk of his holdings. This was before 2014 and before Nvidia (NASDAQ:NVDA) would become a household name.

Nadler's goal was to talk about his experience. Turns out the sale gave Nadler lots to talk about with his students — since it was a big mistake.

According to his trading brokerage, Nadler paid about USD$0.48 per share, factoring in the stock splits during the company's history. Today, Nvidia (NASDAQ:NVDA) is currently trading close to USD$118.58 a share. The firm's value increased by more than USD$2 trillion just last year.

If Nadler had held onto the stock, his gain would have been over 28,000%. The value of his holdings would have been “enough to buy a nice house somewhere,” according to Nadler.

Here's the thing: Nadler sold the stock because he succumbed to a cognitive bias known as loss aversion. A cognitive bias is a consistent, repeated error in the way we process information and perceive reality. Loss aversion is a common cognitive bias that leads us to perceive losses as more significant than gains.

In investing, loss aversion can cause us to fear losing the gains of a winning bet in our portfolio. It's what happened to Nadler when he chose to sell his Nvidia (NASDAQ:NVDA) stock. As he tells it, “What was going through my head was, ‘Hey, I’m new with this. I just made a significant profit in a very short amount of time. I want to lock it in because I’m feeling afraid it may drop again.’”

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How loss aversion is driving your investment decisions

You can judge your own loss aversion by considering whether you’d rather have $100 or flip a coin to either gain $200 for heads or $0 for tails. Most people would prefer the certain $100 and value the potential “loss” of this as greater than the potential but uncertain gain of $200. Still not sure, consider the same coin toss scenario but with a payout of $500 or $1,000. The lower the sum you're willing to accept, rather than risk for the 50/50 chance of getting more, illustrates how risk averse you are (both in coin tosses and investing).

So, how does loss aversion impact your investment decisions?

If you choose to cash-in on your gains, end up being too conservative in your portfolio construction, try to time your entry into the market or instinctively move to cash to avoid volatile markets than you're operting from a loss aversion bias — and this can all hurt your overall portfolio performance.

Avoiding this cognitive bias means carefully evaluating any stock sale, especially if you plan to move to cash, and trying your best to remove emotion (such as fear) from the decision. For instance, if you’re planning to sell a stock because it’s had a strong run, but fundamentals suggest it’s still a solid investment, you may want to step back and evaluate whether you’re making a rational decision or your actions are being driven by fear.

Engaging with a financial adviser could potentially help you manage that fear by providing an arms-length assessment of your decisions. An adviser could also help you set realistic investment goals so you’re not relying on “bets,” while also helping you diversify your holdings to spread your risk and make individual risks within the portfolio feel less intimidating.

Increasingly, there are also technological tools available to help you remove emotion from investment decision-making. For instance, Nadler founded Prof of Wall Street, which provides software products that help investors use behavioural science to manage biases and improve investment decision-making.

Fear can be a powerful force. Identifying it and enlisting the help of a financial adviser or technological tool could help to take the cognitive bias out of investment decision-making and, hopefully, result in better returns.

Sources

1. CNBC Make It: I sold Nvidia—then it went up over 28,000%, says behavioral finance prof: I could’ve bought ‘a nice house somewhere’, by Ryan Ermey (Dec 12, 2024)