DEFINITION of Bag holder
Bag holder is an investor or a trader who has been holding (or hodling) for too long on a particular cryptocurrency and now has to face the consequences of that decision.
WHAT IT IS IN ESSENCE
Actually, bag holder is an informal term used to describe an investor who holds a position in a security which decreases in value until it is worthless. In extreme cases, a bag holder has bought at a high and missed the opportunity to sell, leaving this person with worthless coins.
The expression “left holding the bag” originated in 18th century Britain and spread throughout the English-speaking world. In this context, a person left holding the bag is stuck with the stolen goods, taking the blame from the police while the rest of a criminal gang escapes. You know that the expression to leave someone holding the bag is negative. It means to abandon people; to force responsibility or blame onto them. But you might think that’s because the bag is full. No, it is completely the opposite. That expression referred to someone being left with an empty bag after everyone else removed the good stuff. Empty or full, this expression has never fallen out of style.
HOW TO USE
Never be one of them. Overall, the market is full of bag holding candidates. Why should you stay in that crowd?
Right question in: how not to be the Bag holder?
For instance, you buy a house that turns out to need massive structural repairs. These repairs are going to cost more than what the house is worth. So you are kinda “holding the bag” in that transaction.
In the world of stocks, the term “bag holder” means the same thing.
Let’s say that you buy a stock at $10. The company is found to be fraudulently inflating their numbers shortly thereafter. And the stock plummets, as a result, trading down to as low as $0.55.
You are said to be a “bag holder” now, as you are holding an asset that has become almost entirely worthless.
But by following WYT, you’ll be able to improve your chances of avoiding these potential mines. It is possible to find good companies trading at bargain prices. You just have to be willing to put in the extra effort.