I own some stock that lost more than half its value. It has now been more or less stable for months, and I'm tempted to get rid of it because I see poor prospects in the future for this line of business.
However, I'm told by others that this is unwise, that this is the worst time to sell -- I should recover the losses!
Isn't this the gambler's fallacy? What stops the stock from going down by another half in the future, again? And again?
The people giving me this advice have no insight at all into this particular stock nor have a particular keen insight into economics in general. However, they present this as if it is obvious fact that everyone should know, that if you have experienced this, then you should wait until it has regained at least some of its value.
What basis would anyone have for this statement? Is it true that statistically, more often than not, a company will recover?
The way I view this, is if I would rather buy or sell stock in the company now. What happened in the past is simply unfortunate (for me), it by itself doesn't have any bearing on the future for this company.