scrip has been crashinbg over past few months with huge folio losses
Does this hold any potential in future or book losses?
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Should you hold or book a loss? Ask just 3 questions:
-
Is the business still good?
– Revenue stable/growing
– No major debt or fraud
If NO — book loss. -
Why did the stock fall?
– Market/sector issue ---- OK to hold
– Business model broken ----- exit -
Would you buy it today at this price?
– If YES — hold
– If NO — you’re holding only because of loss — book it
Buffett logic works ONLY if the business is intact.
Bad business + long-term holding = bigger loss.
Hold good business. Exit broken story.
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Why did it crash? Did you have a SL in mind, when you entered the trade? What about now? How much are you willing to lose more in monetary terms, for a option/chance to recover? Did you have any missed opportunities during the period of waiting? How much more are you willing to lose more in terms of missed opportunities, for a chance to recover? Decide now. If you’re willing to take 1000 more loss and a week to wait to see if it recovers, that’s fine. If you’re willing to take 50L more loss and a year to wait, that’s also fine. But decide now. Long term doesn’t mean no stop loss whatsoever.
if nothing else, selling at loss will help you practice letting go and accepting losses, especially when it moves up just after you sell. Cultivate the joy of letting go (JOLG) instead of the fear of missing out(FOMO).