What Does it Mean When You Sell Stocks at a Loss?

Selling stocks for less than what you paid for them is a loss.

The price of stocks--shares of a business sold on the open market--change constantly based on the demand of investors. If a stock price rises after an investor has purchased it, he can sell it for a profit. If not, the stock will be sold at a loss.

Features

Nearly all investors purchase stocks with the intention of profiting financially from them, either through the receipt of dividends or by reselling the stock at a higher price. However, if the price of a stock goes down after it has been purchased, the investor may still choose to sell the stock, even though he will lose money on the sale.

Considerations

When buying and selling stocks, investors must generally pay a fee to a broker to transact the sale. Even if the stock is later resold at the same price for which it was purchase, the stock can be considered to be sold at a loss if the money earned from the sale does not cover the broker's fee.

Theories/Speculation

Stocks can go down in price, all of which are tied to the demand by investors. If a company loses value due to poor performance, the stocks will be worthless, a depreciation that will likely be reflected in their price. A belief among investors that a company will do poorly in the future can also lead to a drop in its stock price.

References

• "USA Today": How to Make the Most Out of Selling Stocks for a Loss
• Money: Stock Market Investing for Beginners