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Bag Holder

Definition

In U.S. financial slang, a bagholder is a shareholder left holding shares of worthless stocks.

What is 'Bag Holder'

An informal investment term used to describe an investor who holds a position in a stock which decreases in value until it is worthless. Typically, the bag holder will hold the position for an extended period of time in which most of the investment is lost.

Explaining 'Bag Holder'

Symbolically, the investor is left holding a bag full of worthless material, representing worthless stock. The bag holder, typically, will retain an investment even though there is convincing evidence that the value will continue to drop.

There are several reasons this might happen, such as neglecting an underperforming portfolio, an investor not wanting to admit a mistake, or just plain hope that the stock will recover. Setting limits on losses and having a good exit strategy are ways to avoid this situation.


Further Reading


An economic analysis of a drug-selling gang's finances
academic.oup.com [PDF]
… pay roughly $1500 for the quantity of cocaine that fits in a ziploc-type sandwich holder … A bag contains an extremely small quantity of crack-cocaine (eg, a few pebbles) and typically … By our calculations, between 10,000 and 15,000 bags can be produced from one kilogram of …

An economic analysis of a drug-selling gang's financesAn economic analysis of a drug-selling gang's finances
www.nber.org [PDF]
… pay roughly $1500 for the quantity of cocaine that fits in a ziploc-type sandwich holder … A bag contains an extremely small quantity of crack-cocaine (eg, a few pebbles) and typically … By our calculations, between 10,000 and 15,000 bags can be produced from one kilogram of …

Financial and external reporting research: the broadening corporate governance challengeFinancial and external reporting research: the broadening corporate governance challenge
www.tandfonline.com [PDF]
… pay roughly $1500 for the quantity of cocaine that fits in a ziploc-type sandwich holder … A bag contains an extremely small quantity of crack-cocaine (eg, a few pebbles) and typically … By our calculations, between 10,000 and 15,000 bags can be produced from one kilogram of …

Looting: the economic underworld of bankruptcy for profitLooting: the economic underworld of bankruptcy for profit
www.jstor.org [PDF]
… pay roughly $1500 for the quantity of cocaine that fits in a ziploc-type sandwich holder … A bag contains an extremely small quantity of crack-cocaine (eg, a few pebbles) and typically … By our calculations, between 10,000 and 15,000 bags can be produced from one kilogram of …

The role of the state in financial marketsThe role of the state in financial markets
academic.oup.com [PDF]
… pay roughly $1500 for the quantity of cocaine that fits in a ziploc-type sandwich holder … A bag contains an extremely small quantity of crack-cocaine (eg, a few pebbles) and typically … By our calculations, between 10,000 and 15,000 bags can be produced from one kilogram of …

Monterrey consensus on financing for development: response sought from international economic lawMonterrey consensus on financing for development: response sought from international economic law
heinonline.org [PDF]
… pay roughly $1500 for the quantity of cocaine that fits in a ziploc-type sandwich holder … A bag contains an extremely small quantity of crack-cocaine (eg, a few pebbles) and typically … By our calculations, between 10,000 and 15,000 bags can be produced from one kilogram of …



Q&A About Bag Holder


Why do investors hold onto their stocks even though they are losing money?

Investors may hold onto their stocks because they don't want to admit that they made a mistake or just plain hope that the stock will recover.

What is a bag holder?

A bag holder is an informal investment term used to describe an investor who holds a position in a stock which decreases in value until it is worthless.

What does the term "bag holder" symbolize?

The term "bag holder" symbolizes that the investor has been left holding a bag full of worthless material, representing worthless stock.

How can you avoid being labeled as a bag holder?

Setting limits on losses and having good exit strategies are ways to avoid this situation.