Bag Holder

DEFINITION of '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.

BREAKING DOWN '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.

RELATED TERMS
  1. Bagging the Street

    An investor's failure to avoid trading in the stocks that are ...
  2. Brown Bag Meeting

    An informal meeting that takes place over lunch. This type of ...
  3. Worthless Securities

    Securities that have a market value of zero. Worthless securities ...
  4. Bag Man

    Any person in charge of organizing, collecting and transporting ...
  5. Wallpaper

    The name given to stocks, bonds and other securities that have ...
  6. Registered Holder

    Shareholders who hold their shares directly with a company.
Related Articles
  1. Personal Finance

    Are Hermès Bags Worth the Investment?

    In a word, yes. Now, how do you get your hands on a coveted Kelly or Birkin?
  2. Active Trading Fundamentals

    The Art Of Cutting Your Losses

    Taking corrective action before your losses worsen is always a good strategy. Find out how to keep your capital losses small and let your winners run.
  3. Personal Finance

    Designer Luggage: Is It Worth the Money?

    You can spend anywhere from $35 to $3,500 on luggage. Is an expensive suitcase necessarily a better suitcase?
  4. Personal Finance

    Movie Theater Popcorn

    Consumers just can't live without these costly items.
  5. Active Trading

    Sell the losers and let the winners ride!

    These guiding principles will help you avoid common folly during the decision-making process.
  6. Active Trading

    Value Investing: Common Alternatives To Value Investing

    There are dramatic differences in the ways different types of investors make their investment decisions. In this section, we'll look at some of the most common investment philosophies and ...
  7. Options & Futures

    Options Basics: How Options Work

    Now that you know the basics of options, here is an example of how they work. We'll use a fictional firm called Cory's Tequila Company.
  8. Active Trading Fundamentals

    Five Minute Investing: Things To Avoid

    Building up the last chapter, we are now ready to explore and face the mistakes that nearly every beginning investor makes. Do not skip over this or any other part of the book because you need ...
  9. Professionals

    Options: Advantages and Disadvantages

    Options: Advantages and Disadvantages
  10. Buy and Hold Traders

    Buy and Hold Traders, also called Long-Term Traders, are stock market investors who are buying stocks and holding them for a long period of time. This category most likely constitutes the largest ...
RELATED FAQS
  1. Can a stock lose all its value? How would this affect a long or short position?

    The answer to the first part of this question is pretty straightforward: yes, stocks are able to lose all their value in ... Read Answer >>
  2. What happens to the voting rights on shares when the shares are used in a short sale ...

    The registered owner of the security, known as the holder of record, is the investor who retains voting rights. This means ... Read Answer >>
  3. What are common investing mistakes in bear markets?

    Learn why investing in a tumultuous market can be challenging even for the most experienced investors. Avoiding these common ... Read Answer >>
  4. What's the difference between a long and short position in the market?

    Understand long and short positions for stocks and option contracts; combine long and short positions for added leverage ... Read Answer >>
  5. How do I determine what the right situation is to make a covered call?

    Learn what a covered call is, how to use a covered call strategy, and what situations to sell a call option against a long ... Read Answer >>
  6. What country produces the most coffee?

    Outstripping its next three competitors with its 34.2 millions bags of arabica and 17 million bags of robusta, Brazil is ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center