Stock Market · True or False
Is it true that loss aversion causes investors to hold losing stocks too long?
True. People avoid realizing losses.
Loss aversion makes losses feel twice as painful as equivalent gains feel good, causing investors to irrationally hold losers hoping to break even rather than cutting losses.
Refusing to sell a declining stock because selling would make the loss real, while the money continues to shrink in a failing investment.
This scenario is one of 155 in the Skillful Stock Market track. Each card states a situation, you decide true or false, and the explanation follows immediately.
- Answer
- True
- Track
- Stock Market
- Topics
- behavioral-finance, loss-aversion
Also asked as
What is loss aversion in investing? Why investors hold losing stocks too long? How fear of loss affects investment decisions?
The scenario in full
Loss aversion causes investors to hold losing stocks too long.
Frequently asked questions
Is it true that loss aversion causes investors to hold losing stocks too long?
True. People avoid realizing losses.
What is loss aversion in investing?
True. People avoid realizing losses. Loss aversion makes losses feel twice as painful as equivalent gains feel good, causing investors to irrationally hold losers hoping to break even rather than cutting losses.
Why investors hold losing stocks too long?
True. People avoid realizing losses. Loss aversion makes losses feel twice as painful as equivalent gains feel good, causing investors to irrationally hold losers hoping to break even rather than cutting losses.
How fear of loss affects investment decisions?
True. People avoid realizing losses. Loss aversion makes losses feel twice as painful as equivalent gains feel good, causing investors to irrationally hold losers hoping to break even rather than cutting losses.
Where does this stock market question come from?
It is one of 155 scenarios in the Skillful Stock Market track. Each card states a realistic situation, you decide true or false, and the explanation follows immediately.
How do I practise more questions like this?
Start the Stock Market quiz. It runs about two minutes per session, the first 150 questions are free across every category, and your progress saves automatically.