when you find yourself in a hole-stop digging

Will Rogers says and Warren Buffett agrees -

"The most important thing to do when you find yourself in a hole is to stop digging."

From the book: seeking wisdom from Darwin to Munger by Peter Bevelin

Merely because you've spent money or time on some project or investment doesn't mean you must continue to spend it in the

future. Time, effort, and money spent are gone. Decisions should be based on

where you want to be. Not where you've been. Base decisions on the present

situation and future consequences. What happened in the past may be a guide

for estimating how likely something is to happen in the future. Ask: What do

I want to achieve? What causes that? Considering what I know today and what

is likely to happen in the future, how should I act to achieve my goal? Will new

money and time invested achieve my goal? Assume I never invested in this and

it was presented to me for the first time, would I invest in it today? If not, then

stop and do something about it.

Charles Munger says:

Berkshire extracted a lot of capital out of it [the textile business] and put it elsewhere. And

if Berkshire had tried to keep fighting the decline of that business with more and more

money, it would have blown most of its capital. There's a time to fight and there's a time

to run away.

One example come from the stock market investment, as when we find that we have invested in a wrong stock and still continuing with that stock in the hope that one day it will provide us better returns, that is wrong. Instead of hoping we should sell all the holding s at whatever price it is and invest that money in some other good stocks,

second example is instead continuing with bad relationship or bad friendship, which have no cure available now, break it start it again from start.

There are many real life situations where we can apply this thought, it will save you from lot of money and troubles.

Thanks & Regards,
Mahesh