Simple table showing why it may be better to cut your losses early

Given recent market turmoil, seeing lots of posts and comments saying words to the effect of “share X has gone down 50% – it's a great time to get back in” or “it's already down 50%, I may as well hold on”. I'm sure most are already aware of the math, but sometimes seeing the percentage recoveries needed in black and white can give a pause for thought before diving backing.

Not saying don't buy back in or DCA down etc – I certainly will be for some index ETFs. Just don't do it on a whim! Look at the percentage recovery needed and ask yourself whether in the current economic and political environment, is it likely in the time frame you are looking at. Equally, could it get worse!

For what its worth, I think the central banks cannot raise interest rates like they are implying and need to simply due to the amount of debt they have allowed to accumulate( and encouraged people to accumulate at all levels of society – both corporate and individual ).

If you bought a share at a nominal price of 100 and have already suffered a 50% loss. Mentally, you may be sanguine about losing another 10 or 20, but check the percentage recovery needed to get you back to break even and see if you are still sanguine about it.