“Won’t Sell Even at a Loss”...What Investment Strategy Did 66.6% of Retail Investors Choose?

[Financial News] A survey found that two out of three individual investors in domestic stocks either held on to their stocks or bought more without selling, even when their holdings incurred losses. By contrast, fewer than one in four investors cut their losses according to a pre-established rule.
According to a report titled “Analysis of Domestic Individual Investors’ Investment Behavior and Trends,” released on the 12th by Toss Insight of the Toss Financial Management Research Institute, 42.2% of respondents said they continued to hold loss-making stocks rather than sell them.
Some 24.4% of respondents said they “averaged down”—buying more shares when prices fall to lower their average purchase price. Combined with those who said they continued to hold loss-making stocks, the figure was 66.6%, meaning about two-thirds of all respondents did not sell their stocks even after incurring losses.
By contrast, only 23.9% said they cut their losses according to investment rules they had set in advance.
The survey was conducted this year in July and August among 1,000 individual investors in domestic stocks.
Returns also differed by investment approach. The share reporting losses in domestic stock investments over the past year was 26.5% for investors who followed stop-loss rules, compared with 41.7% for those who continued to hold loss-making stocks.
Conversely, 19.9% of investors who followed stop-loss rules said they had recorded returns of 30% or more, compared with 10.5% of those who continued to hold loss-making stocks.
The shorter the investment experience, the more respondents said they had incurred losses. The share reporting losses was 48.7% among those with less than one year of investment experience, 41.2% among those with one to three years, and 26.7% among those with three to five years.
The institute found that investment performance was more closely associated with factors such as the actual length of time investors held stocks, their investment experience, and how they responded to losses than with the strategies they chose or their self-assessed risk tolerance.
The institute recommended that investor protection policies and financial education take into account not only age and investors’ self-assessed risk tolerance, but also their actual trading practices and responses to losses.


[email protected] Han Seung-gon Reporter