RE: Dying brand5 Nov 2020 13:33
Fleecy
“Personally, I'll sit on my paper losses until they come good”
The thing to remember about paper losses is that sometimes they never come good. I can give you hundreds if examples where shareprices never return to former valuations.
Superdry 157 - it once traded at over £20
Imperial 1250p - once traded at £40
M&S 96p -once traded at over £7
Standard Chartered 356 - once traded at over £18
I could go on all day and in to next week.
Do you really believe investors of the above will ever see their money back?
You’d be a fool if you thought so.
I understand the psychology behind the “paper loss fallacy’ investors use to console themselves on failed investments. For the most part, it’s the human mechanism of self-denial in the face of unpalatable circumstances.
Anyone who trades is going to get caught up in failed investments , but what matters is how much under you are - if it’s 10-25 percent there’s a real possibility that the paper loss will be erased. But if you bought into the shares above near their highs you’d need the shareprice to rise by thousands of percent just to break even.
Your slice of BT shares for example @292 would need to triple for you to break even. Age is also a factor - if you’re sitting on a huge financial loss at 30 you’ve got time on your side - it’s a different story at 60. There’s a deadline; the older you are the less likely it is you’ll erase those paper losses.
I don’t believe BT will ever go bust but if you’ve read the boards of companies like Woolworths, HMV, Debenhams and countless others, you’ll know that those invested also consoled themselves with the paper loss fallacy. That illusion died when the companies bit the dust.
Toff
Sign In
Follow the stocks
