Author Topic: Bad stock pick - at what point should I cut and run?  (Read 2577 times)

Tumbler

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Bad stock pick - at what point should I cut and run?
« on: September 19, 2017, 10:37:57 AM »
I have shares in a biotech stock that were purchased years ago (before I stopped trying to pick stocks). Back in they day I sold on a record high and bought in again on the down swing. It's continued to slide with some slight upticks for the past 2 years. The shares are now worth about 1/4 what I paid for them. We're not talking about much money at this point (~$1k) and I wouldn't really miss it if I lost it all. Would you cut your losses and sell now or ride it out to see if it rebounds?

geekette

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Re: Bad stock pick - at what point should I cut and run?
« Reply #1 on: September 19, 2017, 10:50:32 AM »
Would you buy it now at the current price?  If not, why hold it?

NeonPegasus

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Re: Bad stock pick - at what point should I cut and run?
« Reply #2 on: September 19, 2017, 10:59:52 AM »
I'd ditch it.

You're waiting for it to maybe go back up. Do you know anything about the company that makes you think it will? Or, are you just hoping?

In the meantime, you are dealing with the opportunity cost of having this money wrapped up in that stock when it could be invested in something like VTSAX or used to max out a tax advantaged account.

So, you shouldn't be evaluating only the stock but rather, comparing the stock to all of the other potentially higher and better uses for that money.

Rubic

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Re: Bad stock pick - at what point should I cut and run?
« Reply #3 on: September 19, 2017, 11:03:56 AM »
I have shares in a biotech stock that were purchased years ago (before I stopped trying to pick stocks). Back in they day I sold on a record high and bought in again on the down swing. It's continued to slide with some slight upticks for the past 2 years. The shares are now worth about 1/4 what I paid for them. We're not talking about much money at this point (~$1k) and I wouldn't really miss it if I lost it all. Would you cut your losses and sell now or ride it out to see if it rebounds?

You might have the opportunity to offset an equivalent amount
of capital gains.  Check out tax-loss harvesting:

https://www.bogleheads.org/wiki/Tax_loss_harvesting

Mr. Boh

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Re: Bad stock pick - at what point should I cut and run?
« Reply #4 on: September 19, 2017, 03:36:04 PM »
I have shares in a biotech stock that were purchased years ago (before I stopped trying to pick stocks). Back in they day I sold on a record high and bought in again on the down swing. It's continued to slide with some slight upticks for the past 2 years. The shares are now worth about 1/4 what I paid for them. We're not talking about much money at this point (~$1k) and I wouldn't really miss it if I lost it all. Would you cut your losses and sell now or ride it out to see if it rebounds?

You might have the opportunity to offset an equivalent amount
of capital gains.  Check out tax-loss harvesting:

https://www.bogleheads.org/wiki/Tax_loss_harvesting

I agree with this. Do you have any big winners that you want to sell but have been hesitant to because of capital gains taxes? If so here is your chance to roll out of both positions and put the funds into an index.

theolympians

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Re: Bad stock pick - at what point should I cut and run?
« Reply #5 on: September 19, 2017, 06:09:42 PM »
What is the stock?

PDXTabs

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Re: Bad stock pick - at what point should I cut and run?
« Reply #6 on: September 20, 2017, 07:47:44 PM »
You might have the opportunity to offset an equivalent amount
of capital gains.  Check out tax-loss harvesting:

https://www.bogleheads.org/wiki/Tax_loss_harvesting

In the US you can offset $3k of ordinary income if you don't have any realized capital gains to offset.

wingfold2001

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Re: Bad stock pick - at what point should I cut and run?
« Reply #7 on: October 02, 2017, 02:44:58 AM »
This is always a tough one. The only thing you can do is document it. The money doesn't matter if you don't become wiser.

Linea_Norway

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Re: Bad stock pick - at what point should I cut and run?
« Reply #8 on: October 02, 2017, 05:26:53 AM »
I also invested in something that is making a loss. Some medical fund. I thought there was great money to make in the medical world. It made a 10% loss almost immediately after the purchase. Now it has climbed back to 8% loss. I have decided to keep it and see if it goes up again. It's only a small sum. But it obviously was a wrong horse to bet on and I should rather have invested it in one of my other index funds. If these stock are polluting the overview of your stock and reminding you every day of having made a mistake, then selling them and get rid of them might be good for your mind.