I own a handful (literally 10) shares that have dropped almost 13%. This doesn't amount to a major loss of investment, but a loss nonetheless. The company does not appear to be regaining any value. Rather, it seems to fluctuate between just below what I paid and the 13% or that it sits at now. It's a pharma stock so I've been hopeful that it will remain steady.

I also don't know what the impact on taxes would be.

Does it make sense to just sell it off and take the hit or should I wait to see if it at least gets close to how much I bought it for?

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    In which country do you live? How long have you owned the shares? – Hart CO Dec 11 '18 at 16:15
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    Selling investments after they go down in price and buying them after they go up in price is a sure way to lose money. It’s better to do it the other way around. – Mike Scott Dec 11 '18 at 16:17
  • @MikeScott Not trying to sell and then rebuy. I'm trying to figure out if it is worth it to hold on to them or cut my losses and buy something else that might actually make me money. – theillien Dec 11 '18 at 16:34
  • @HartCO United States – theillien Dec 11 '18 at 16:34
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    @theillien This is a common quandry for investors. Here is the rule I like to apply to resolve it. What you bought it for is sunk cost, ignore that in your decision. The real decision is whether you would BUY that stock at today's price. because when you keep it that is what you are doing. Think of it as a new transaction. – JohnFx Dec 12 '18 at 3:47

Knowing whether it's a good idea to sell the stock now involves knowing what its future price will be. No one knows that.

Common advice often offered is that you should evaluate the stock to determine what its prospects are going forward and base your hold/sell decision on that. Well, if people could actually do that, why do they end up with losing stocks? Others might suggest, would you buy the stock today if you did not own any? Either way, the reality is that you own the stock at a loss.

Breakevenitis is not a good condition to contract. If reputable sources such as analysts are downgrading the stock, perhaps you should lose it - though reputable may be debatable in the context of analysts.

Selling the stock will provide a capital loss which you can deduct, subject to the $3,000 limit for individuals (US). It will reduce you tax liability by your tax bracket rate.

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  • The $3000 limit is for deducting it from ordinary income, right? My understanding is that there's no limit to how much capital loss you can deduct from capital gains. – Acccumulation Dec 11 '18 at 20:37
  • That is correct unless one is a mark-to-market trader (Trader Tax Status) in which case there is no limit on the amount that one can deduct capital losses and the wash sale violation is not applicable. – Bob Baerker Dec 11 '18 at 21:10

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