"No losses till you sell" is the worst advice ever
Worst piece of advice ever. You lose when the value of the equity and shares you hold drops. It doesn't matter if you sell or not. Because the value of what you have is driven by supply and demand. Doesn't matter if it's a Ponzi scheme or not. Doesn't matter if it might "rise" up in value in the future or not (because nobody knows how it'll turn out with 100% certainty, it's all probabilistic). It's like, I have a toilet paper. I sell it to you for $500. No loss for you, because you're not selling the toilet paper. Okay, just keep the toilet paper. Then when the markets want to buy your toilet paper, the most they'll buy is $2. Is that a loss? No loss! You keep that toilet paper forever. You can buy more toilet paper for $2, but is that a loss until you sell? No, you're holding the toilet paper with diamond hands and your children might be able to inherit your piece of toilet paper. Your child says, how much is this worth? You say "it's worth $500", even though you can buy a brand new piece of toilet paper for $2. Then your grandchild inherits the toilet paper. You keep saying it's worth $500 even when you exchange it. But the most someone will give you for that toilet paper is $2. Exchanges determine the value, not BS philosophy. What has the Internet come to coming up with such BS that damages my brain when I read it. You put stop-losses and invest responsibly, not like a compulsive gambler. People's lives and mortgages are getting destroyed.
Sometimes “Cut your losses” is better
I do not think this advice applies quite the same if buying to intentionally inflate a speculative bubble or out of spite for hedge funds. 100% not negatively judging; I do believe everyone has the right to do what they want in the case of meme stocks. But investing chestnuts like you only lose when you sell really don’t seem to apply here.
Bagholder vibes
You "Realize" your gain/loss when you sell. Until then it's all on paper. That is the term most financial institution use.
Paper loss is still loss. Otherwise I can create the best performing hedge fund by only realizing gains and hold unrealized losses forever.
STFU and buy the dip
The $500 in your example is a sunk cost, giving you an option to sell your toilet paper in perpetuity. Whether that option remains worth holding depends on your beliefs about the future. If you envision another toilet paper run that will drive that price higher than the present price at which you can sell, and as high as you think it will go, you hold until that time. If not, you sell. Holding out for something positive to drive the price up is a valid VC mentality, too. If you have a long horizon and assume that the underlying won't vanish out of existence along the way, it's bound to eventually hit on something that drives the price up. The catch is guessing whether it going high will outperform your opportunity cost of gaining liquidity and investing elsewhere. With your TP example, unlikely. With GME, seems plausible. I don't own any because my risk tolerance isn't high enough to play with meme volatility, but that's clearly not the case for many.
I always cut at 5%. I am more of a momentum trader though.
There is very real rationale behind this from tax purposes friend
Explain? You can write off 3k losses only.
Also, I'd rather pay capital gains than write off losses.