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The OP's question really varies by type of investment, age, and need.
Type of investment: if it's a tangible item like a car or a boat, then depreciation is expected. Unless it happens to be a classic collector car then you should almost always expect to sell at a loss. If it's real estate or something like stocks, then that's where age and need come into play.
Age: time is finite, so if you're 80 years old I'd sell and cut my losses if I needed the money rather than wait around 5 years to sell since there is more than a decent chance you might not be around 5 years later, and if you were you'd likely have very little time or energy to enjoy the profit. Different story if your 30 or 40. That said, if you don't need to money immediately and you can afford to wait, they why not wait it out rather than take a loss? Real estate and stocks will always bounce back eventually. History has shown that.
One other thing to consider before choosing to wait it out and not sell immediately, though, is carrying costs. I think not enough people take that into consideration when figuring their math. For real estate it's things like property taxes, maintenance, utilities, etc. For other wealth vehicles it's things like annual fees, transaction fees, etc. Inflation applies in all cases. Need to take those things into account when deciding to sell or hold.