To The Moon

When facing paper losses, an investor has to ask why is the stock price down from when he purchased it. Are revenues and earnings declining for the past few years, or is the decline due to temporary macroeconomic conditions?

What is the intrinsic value of the stock? Has the investor over paid for the stock? Is the business a still a good quality business, with a strong economic moat that its competitors struggle to break into? For example, if you look at Apple's annual filing Form 10-K, it mentions that Apple's competitors often sell electronic products are very thin margins, and sometimes those competitors are loss making selling these electronics, in an attempt to undercut Apple's premium pricing. Eventually when the market conditions turn, good quality businesses will eventually recover.

Examples are Apple, Microsoft & Nvidia, where year-to-date they are up 40.27%, 38.95% and 172.06% respectively. In fact, Nvidia is at it's all time high, while Apple & Microsoft are close to reaching that level.

If the investor is holding bad quality business, especially if it's a speculative stock that other retail traders have bought based on hype, or it's loss making continues for several years, it's time to sell the stock and minimise the losses. Examples of business that are in a decline are AMC, Peloton, and Sea Limited. These stocks will never recover to their highs reached during the liquidity boost during the pandemic.

The recovered capital should then be reinvested into top quality businesses. 

$Apple(AAPL)$ 

$Microsoft(MSFT)$ 

$NVIDIA Corp(NVDA)$