1 Answers: Why would people sell their paper losses and realise capital losses?

Question

luckily this year i have sold some stocks and made 20% on some. I’ve also lost around 5% on some which was the right decision because if I held they would be down even more.

Some others i have not sold and i should have. Some went down badly. One of mine went down 60% at one point, recovered slightly and now is sitting at a 5% loss.

My question is. Why do people realise their paper losses and literally lose money. If its a solid company with solid fundamentals, i.e. Apple, Why would you not wait? Even if I bought Apple at $220, why would you sell now?

I’m now basically dead even on Apple – I bought in May. I could have sold 20% up last month. But I’m still holding because it will go up. I use AAPL as an example because it’s not just that stock, the whole market is having a shocker at the moment.

Am I thinking of this the right way? I am a relatively new investor.

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Anonymous 5 months 1 Answer 43 views 0

Answer ( 1 )

  1. It’s a good question. I guess because the market is driven by greed and fear. It is true that if you owned APPLE stock there was no reason to sell it. The only problem is some people have not done their fundamental analysis so they do not really know what they own or how the company will do in the future.

    If they bought the stock because someone told them too or just because they own an iPad then they may sell at any sign of trouble, even locking in a loss.

    However if they knew that longterm the company will perform well then they would likely hold and the paper losses would soon become massive gains.

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