Learn Investing: When Losses Paralyze Action

“I’m Not Selling Even If It Goes to Zero” — The Psychology Behind Retail Investors Holding Large Losses

An instant behavioral investing guide that explores why some investors freeze when deeply in the red, how this impacts market dynamics, and whether institutions behave any differently.

“The deeper the loss, the harder it becomes to act — and that inaction shapes what happens next.”

The Spark: A Real Quote From a Retail Investor

“I’m down around 25–30% on Apple 🤦‍♂️ Now I’m not selling, even if it goes to zero.”

That quote — from a real investor — says a lot about how psychology affects behavior in the market.

On the surface, it might sound like conviction or loyalty. But underneath, it reflects:

Loss aversion
Cognitive dissonance
Ego attachment to an investment

And when thousands (or millions) of retail investors feel the same way about a stock — especially a major one like Apple — it can shift the very dynamics of supply and demand.

The “No Return” Point: When Losses Paralyze Action

When investors lose a small amount, they often try to cut losses or reassess. But when the loss grows to 25–30% or more, something else happens:

The investor feels defeated
Emotionally, they cross into “hope mode”
They stop making strategic decisions and instead adopt a passive stance

At that point, the thinking often becomes:

“I’m already down big. Selling now would make the loss real.”

But the truth is — the loss is already real. What matters is what happens next.

Oversold, But With Fewer Sellers

Ironically, when enough investors feel this way, the stock can appear technically oversold, but still:

Doesn’t drop much further
Begins to stabilize due to a lack of active sellers

Everyone is frozen. No one wants to lock in losses. Selling dries up — not because sentiment improves, but because participants feel stuck.

This creates the classic late-stage selloff profile:

Volume drops
Selling pressure fades
Price action flattens or grinds sideways

Until something changes — news, a technical break, a new buyer class steps in — the stock just sits there, heavy and numb.

Do Institutions Think the Same Way?

It’s easy to assume only retail investors fall into emotional traps. But the truth is: institutions are made up of people too.

Portfolio managers and CIOs may have their own versions of “I’m not selling”:

“Apple dropped too far — we’ll hold and wait for a bounce.”
“Let’s reduce exposure after it rebounds 5–10%, not here.”

They might not say it with emojis, but the thinking is strikingly similar.

Even at institutional levels:

There’s reluctance to realize large losses
Exit plans get delayed
Risk committees hesitate to sell quality names at steep discounts

So while institutions have more tools and structure, they’re not immune to anchoring, bias, or hope-based strategy.

What This Means for Investors Observing Oversold Stocks

If a mega-cap stock like Apple has:

Declines apx 35% from their high, withn a very short period time
Reached a round-number psychological level
Shown signs of slowing momentum on the downside
Lower volume than previous selloffs
Its RSI on the daily chart is at 20, well below the ‘oversold’ 30 mark

It may reflect a saturated selling zone — not necessarily a reversal, but a pause in pain.

From here:

Institutions may quietly rotate out into strength
Retail may wait forever for “even”
Volatility may compress until a new catalyst arrives

Final Thought: Losses Are Psychological Before They’re Strategic

If you ever hear yourself saying, “I’m not selling, even if it goes to zero,” — pause. That’s not a strategy. That’s emotional surrender.

The better question is:

“If I didn’t own this today, would I want to buy it at this price?”

Whether you’re a retail investor or managing a fund, clarity always beats hope.