Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Personally, unless I was completely broke and downright needed the money, I'd rather sit on something for years at a time than sell it and take a loss on it. I'm not about to sell something for less than I paid for it just to get rid of it, I'm not in the business of breaking even or taking a loss, I'm in it to make a profit.
Obviously I'm not talking about buying something brand new and expecting to get the same price for it used. But if I invest in an item with the intention of flipping it, I'm not going to sell it for less than I have in it, I'd rather it sit around collecting dust than to pay $100 for something and sell it for $50 just because I'm tired of it sitting around.
I see people do this all the time, sitting on something for years instead of selling, and lots of times it is the wrong decision.
Depends on the exact situation of course, but selling and using the available cash for other more profitable ventures is my preferred choice.
I tend to think about overall cash flow and profit much more than just out right profit on only one item.
While you are sitting around and making nothing, I would rather take the $50 and turn it into more money. Cutting your losses is often a smart thing to do.
I see this all the time at gunshows. Guys sit on guns for years, show after show, because they don't want to take a loss. I literally could sell that gun at a loss and generate 100 times the money, buying and selling with that money, while they are waiting, because they don't want to take a loss.
In the end they are still waiting and I am making money because I don't mind taking a loss.
Last edited by High Altitude; 09-21-2017 at 12:23 PM..
I see people do this all the time, sitting on something for years instead of selling, and lots of times it is the wrong decision.
Depends on the exact situation of course, but selling and using the available cash for other more profitable ventures is my preferred choice.
I tend to think about overall cash flow and profit much more than just out right profit on only one item.
While you are sitting around and making nothing, I would rather take the $50 and turn it into more money. Cutting your losses is often a smart thing to do.
I see this all the time at gunshows. Guys sit on guns for years, show after show, because they don't want to take a loss. I literally could sell that gun at a loss and generate 100 times the money, buying and selling with that money, while they are waiting, because they don't want to take a loss.
In the end they are still waiting and I am making money because I don't mind taking a loss.
I can see your point. I'll add that if you have to "cut your losses" more often than not, then you're not running a very good business.
We bought a home at the height of the market for 590k. Put about 25k into it so total 620k. We saw the market downturn coming and listed and sold for 580k. People were telling us we were nuts for selling, that the homes would be worth a million in 10 years etc. They laughed at us when we said prices were about to crash and they'd be lucky to get their money back in 10 years. So we took a big loss and most of those that laughed at us now have a bankruptcy under their belt and the financial stress broke many of them up. Those homes even ten years later would be lucky to sell for 350k or so. Bad situation that we got out of just in time.
In that situation we were right to sell despite the loss and not sit on it for 10 years paying taxes, HOAs and everything else communities face when many go into foreclosure.
We since bought again a few years ago and are about to repeat the process. This is a little different. Prices in this area have risen a ton and sure we could hold out for another year or two and make make a little more. However prices are starting to peak and while it isn't crashing like before yet I don't want to wait until we are in a full blown crash to find some sucker from out of town to buy my house at inflated prices. So we decide to sell in the next month or two after finishing up some stuff for top dollar or near top dollar. We don't have to sell, hell we can sit on it for another 40 years if we want but why not cash out now because like before there is nothing normal about a housing market that jumps almost 75% in 4 years and the underlying demographics don't nearly support current prices.
So here we go again This time we are on the early side but still on the right side.
When to cut losses or hold out is dependent on so many factors there is no rule of thumb. So long as you can make an educated decision, not a decision based only on "feels" or "balls", you can hold your head high and know you made a good decisions. Maybe not the best one, because no one really knows the future, but a decision based on facts and reality which best fits what you're trying to do and your specific situation.
Example of the other end of things is stocks. Most people are dollar cost averaging the ups and downs and for most people trying to time the market is a fools errand. You almost always end up worse off when you do.
Flip of that is if you suddenly are flush with cash or already have a nest egg. Removing some off the table at a time like now when valuations are on the high end might be prudent even if you aren't really trying to time things per say but preserve. Sometimes preservation is worth more than not sleeping at night if you see a 20% correction and are looking at a decade of low growth and retirement is creeping up.
I bought a cargo trailer in Arizona for $2155 and pulled it up to Alaska. Then I tried to sell it for $3000. I got plenty of low ball offers, which I turned down. I put it back on the market for $3000 this spring. Again, plenty of low ball offers that I declined. Then one day someone offered $3000 and we were both happy. I didn't need the money, so I could well afford to hold out. Others may not have that luxury.
Otherwise I'd sell at a loss unless the plan was to keep it for a long time. The idea that there should never be a negative transaction doesn't always fit with the idea that capital has a cost. Doing nothing is often more expensive on the whole than taking a loss now and then.
At least when not actually faced with the decision. In reality people get the idea that the future value will be high enough to justify the lost capital and storage costs even when it's not really true.
Personally, unless I was completely broke and downright needed the money, I'd rather sit on something for years at a time than sell it and take a loss on it. I'm not about to sell something for less than I paid for it just to get rid of it, I'm not in the business of breaking even or taking a loss, I'm in it to make a profit.
Obviously I'm not talking about buying something brand new and expecting to get the same price for it used. But if I invest in an item with the intention of flipping it, I'm not going to sell it for less than I have in it, I'd rather it sit around collecting dust than to pay $100 for something and sell it for $50 just because I'm tired of it sitting around.
What are your thoughts on this subject?
What are we talking about exactly? Most tangible items depreciate. That's a fact of life. As it's sitting it will lose value until it's worthless.
What are we talking about exactly? Most tangible items depreciate. That's a fact of life. As it's sitting it will lose value until it's worthless.
It does depend on what it is, of course. If we're talking a car, let's say, most cars are worth a lot when they are new. Then as soon as someone buys it it loses a sizable chunk of its value because it's now a "used car". That car will depreciate more and more as it gets older, until it's seen as "junk". But wait 20 years or so, when lots of those cars are now in a junkyard, and there are less and less of them out there, the ones that still are will most likely be worth more, as it's lost all the value it's going to depreciate.
So with some items its a curve, really high priced new, then goes down as it ages, then once it's so old it goes back up because people are interested in it for nostalgic reasons. Condition is also a big factor. A 69 Camaro that's been sitting in a field rusting away for 30 years isn't worth nearly what one that's been sitting inside a barn or garage for the same length of time.
Also, some items will never go up in value, as there desirability was low even when they were new.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
This time we are on the early side but still on the right side.
