🗑️Intermediate
The Sunk Cost Trap
Past losses don't justify future ones
A sunk cost is money already spent that cannot be recovered. 'I can't sell — I'm down 40%' is a sunk cost fallacy. The only question that matters is: given what I know today, is this stock the best use of this capital? If not, selling and redeploying into a better opportunity is rational, even if it means realising a loss.
Quick check
A stock you bought is down 50%. The right question to ask is: