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PwC1 is doing it wrong too - or maybe you're just being facetious. You have made money or lost money every time the price changes regardless of whether you sell. There is no "house money" - it's all your money.
My point is that you should think of all of your money as your money and decide how you want it invested irrespective of whether the stock recently appreciated or not. If you think it's over priced, sell regardless.
That's not how it wirjs
Works
Well done, D1. You haven't made money until you actually sell. Now you're playing with "house money" for the stock that appreciated rapidly.
I am personally a long term investor, so if I still like the value proposition, I'll stay in a security event if it has appreciated significantly.
If you have paper (unrealized) profits, they may prove ephemeral if the stock subsequently goes back down. There is an adage that bears make money, bulls make money, pigs get slaughtered. So the colloquial "you haven't made money until you sell" doesn't literally mean that you don't have unrealized gains, it means that you can't count on those gains until you crystallize them by actually selling the equity.
The analogy re "house money" is also not meant to be taken literally. Yes, it's your actual money (well, value, because we're referring to the portion that is unsold). In gambling, one betting strategy when you are "up" is to cash in enough chips that you are taking your original stake off the table. Now you are playing only with your gains (from the house, hence "house money"), which is the most you can lose provided that you don't buy more chips.
Judiciously paring winning investments is a way to lock in gains and reduce risk of idiosyncratic losses in those specific investments.
Your house money analogy suggests that your evaluation of a stock and/or your risk appetite should change based on your subjective accounting of this episode of gambling/investing.
Just because you recently won a lot of money or reaped a windfall investment gain shouldn't change how you invest going forward.
OW is right, OP and P1 are wrong
OW is definitely correct. Who's to say that the most efficient asset allocation wasn't to still keep that money in that stock?
How did we escalate this to right or wrong. @bcg1 Please save your judgment for the mirror. Please don't equate your gambling with my sound speculation. Gambling is about mathematics odds. Speculation with due diligence is smart investing.
Lol^