Nov 1 (Reuters) – - The New York Yankees and their aging and
highly paid third baseman Alex Rodriguez illustrate a problem
all investors face and few completely conquer: sunk costs.

You too, like the Yankees, probably own a security you paid
more for than it is now worth, and you too may well find it
perplexingly hard to sell and accept your loss.

Rodriguez, for those of you who don’t follow baseball, is a
likely hall of famer whose skills, at least based on the
statistical record, have slipped sadly recently. Things came to
a head in the baseball playoffs when the Yankees benched
Rodriguez, the man they will pay $29 million in 2012.

What’s worse, they’ve got another $114 million to dole out
to Rodriguez on a contract that only expires after the 2017
season, at which point he will be 41 years old.

The sensible thing would be for the Yankees to cut their
losses, sending him along with a packet of cash to a team in
exchange for what they can get and the right to use his roster
spot better. Unfortunately, that may prove very difficult for
the Yankees – the richest team in baseball – to bring themselves
to do.