I've often heard the term “bagholding” in the investment world, but what exactly does it mean? Honestly, it’s a situation that happens to almost every investor. Whether you buy stocks, crypto, or other assets, and then the price drops unexpectedly—people usually sell to cut their losses, but we choose to hold because we believe that one day it will bounce back. The result is that we end up bagholding.

Why does this happen? Mostly because we buy based on trends without studying the fundamentals. For example, which stock is doing well in the market—its price is surging, and everyone is buying out of FOMO. We rush in and buy at the highest price without thinking. Or sometimes, we hear rumors from somewhere that a big investor is about to enter, so we rush to buy immediately without checking where the rumor came from. And when the rumor fades, the price drops.

There’s another case that’s fairly harsh: we research that stock thoroughly, the fundamentals are good, and the P/E Ratio is fine. But we enter when the price has already become expensive. Then the company announces that its performance and growth are slow, and the price falls. We refuse to sell because “I won’t sell, so I won’t lock in a loss.” What bagholding is, in the end, is the amount of money we hoped to make profit—but it turns into a long, drawn-out loss.

Avoiding this isn’t as difficult as it sounds. First, set a clear Stop Loss. For instance, if you buy at 20 baht and you’re willing to lose 5%, you should sell at 19 baht—don’t wait. If you wait, it might drop even further.

Second, if you’re a trader, you need to set a sell point to take profit. For example, buy at 5 baht with the intention to sell at 5.2 baht. When the price reaches it, sell right away—don’t secretly think it might go higher.

The most important part is to always study before you buy—whether it’s stocks, crypto, or anything else. You need to understand that business: does it truly have a future? How are its results? Is the price you’re about to buy at reasonable? Don’t just follow the trend from FOMO happening right now, because that kind of panic could cause you to get trapped later.

Another technique that’s quite effective is “averaging down.” If you’ve studied and confirmed that the stock, crypto, or asset is genuinely a good thing, and it’s just that the price has fallen, you can buy additional amounts at lower prices to reduce your average cost. When the price rises—even just a little—you’re already in profit.

In reality, bagholding is something you can avoid if you have the right mindset, a clear entry-and-exit plan, and most importantly, you must study before every trade. Don’t let feelings and FOMO take control of your investment decisions.