What is a bagholder?
A bagholder is financial slang for a person whose stocks decrease in value up until they are worthless. Commonly, this person will be in this position for an extended period of time as the stock continually loses its value.
Where have you heard about a bagholder?
The phrase “holding the bag” dates back to 18th century Britain, when it was used to describe somebody who was left holding a bag of stolen goods. This person would then be caught and blamed by the police and the misfortune would be solely theirs.
What you need to know about a bagholder...
All experts agree that it’s best for business to avoid being a bagholder at all costs. A bagholder may be somebody who is too optimistic about their stock or somebody who lacks the ability to see the unlikelihood of their stock value increasing. Their shortcomings could also come because of ignoring a badly performing portfolio. It’s generally advised for investors to stay aware of their stock values to avoid ending up in this position.