What step should Cody take to improve his investment portfolio?

Selling a failing stock can be a strategic step to improve an investment portfolio. The underlying principle is that holding onto underperforming assets detracts from overall portfolio performance and can lead to further losses. By selling the failing stock, Cody can realize the losses and free up capital that can be reinvested in more promising opportunities.

This approach also aligns with the concept of loss cutting, where investors take action to minimize further financial decline. It allows the investor to reassess their options and potentially diversify their portfolio or invest in stocks that are expected to perform better, which may lead to a higher total return over time. Additionally, selling a failing investment provides the opportunity to reevaluate the portfolio’s strategy, contributing to more informed decision-making in future investments.

While investing more in profitable stocks or buying more of the same stock may seem beneficial, they do not address the underlying issue of the failing stock and could lead to a lack of balance in the portfolio. Diversifying investments further is often a prudent strategy; however, it's essential first to eliminate underperforming assets to focus on more viable options. Thus, selling the failing stock can serve as a crucial step in enhancing Cody's investment strategy.