Sunday evening. Friend's brokerage app open on the kitchen table. One position 35 pct red. Held it for two years. The line he just said out loud.
"I have already lost so much on it. Might as well wait for it to come back to my buy price." The stock does not know he bought it. The buy price is a number on his statement, not a number in the market. Two years is the receipt. The next two years is a fresh decision. He is treating them as if they were the same trade.
35pct
Paper loss on the position
Bought at Rs 100. Holding at Rs 65. The line in the statement that triggers the bias.
54pct
Gain required to break even
From Rs 65 back to Rs 100. The market does not owe him this. The bias treats it as an obligation.
2.0x
Loss aversion coefficient
Kahneman Tversky 1979. A loss hurts roughly twice as much as the equivalent gain feels good. That is the engine.
The first loss is the cheapest. Every additional day of holding is a fresh choice to hold, dressed up as the original purchase. The argument feels like loyalty to the original trade. The math reads it as a new trade at today's price, financed by yesterday's rupees, taxed by tomorrow's opportunity cost. Card two is the break-even ladder. Card three is the three-question framework that gets you out.