Fallacies

Disposition effect

When forced to choose between selling a losing stock (for $5000) and selling a winning stock (for the same price), people will opt to sell the winning stock, because then is official: they've bought and sold a stock at a gain. This is a logical fallacy, because good stocks should be held onto, yet we don't want to mark a loss on our record

  • Ex. Stock 1 - bought at $10000, now $5000
  • Ex. Stock 2 - bought at $2500, now $5000