It is not a loss until he sells at a loss. Look at your stock portfolio right now if you have one, and find the red positions. Are they losses? Nope, not until you sell. Baron doesn't HAVE to sell his positions at a loss. An unrealized loss is not a loss until the wave function collapses and Shroedinger's cat is observed to be dead. That is the way of investing.
What you basically say is that if you have stocks from a company that goes broke, you don't lose any money as you never closed that position as it became impossible to close it. ROFLMAO. Well, then I suggest he never sells. He will never make a loss then. My portfolio is ALWAYS MTM. An open loss is a loss. Go to your bank and ask a loan to trade. How will the bank calculate the value of your portfolio? Will they not care about open losses, because the position is not closed? They will calculate the value of your portfolio MTM and even take only 80% or even less of that value. If you tell them that there is no loss yet, they will laugh at you very hard. In trading and investing, certain securities, such as futures and mutual funds, are also marked to market to show the current market value of these investments. On ET you hear sometimes hilarious things.
I don't mean to sound condescending, but you really should find yourself another profession. With that kind of lazy attitude, you will NEVER succeed as a trader, let alone an investor. Call it quits before it's too late.
It is simply a matter of reality. If you buy your home at 300K, and it's value drops to 200K in a year, did you make a bad investment? No! Only if you sell your home for a loss. If you wait a few more years, your house may go back up in value, over the value you paid for it. Why are you being so dismissive of simple logic? As for @virtusa Your portfolio is always MTM. Really. Um, MTM how? You and I must have different tax laws, because I do not pay taxes or take losses on unrealized gains/losses.
We indeed have different tax laws. Not everybody is living in the US. There is also a world outside of the US. So my portfolio is always MTM. But for tax reasons that doesn't even matter as I pay a flat fee. So how much I make has no importance. If you have a 300K loan on your 300K house and prices drop to 200 K what will your bank do? Let me guess: they will ask additional financial guarantees. Banks watch the liquidation value of your house. If you tell them that their value is not correct as you did not sell your house, they will not be impressed. They will teach you the hard way that selling or not is irrelevant.
Well, what are you on about? A 300K equity home loan on your 300K house? That is beyond the scope of what I was talking about regarding stock portfolios and loss-taking.
Baron, you gotta give virtusa credit where credit is due. He's pretty danged good on calls. He says on Nov 7th...... That was an extremely good call considering price at that moment was above the previous month of October's highs. DAILY CHART BITCOIN
Well, you're really comparing apples to oranges. But what the hell. Okay, if we're talking about a principle residence where you actually eat, sleep and take crap in, then it would not be a problem even if the value drops from 300K to 200K. But suppose it is an investment, eg. rental property. Then it would be a real problem if it were to drop in value and you're still paying mortgage because that would mean you now owe more on your outstanding loan. Anyway, my point is, you should cut your losses early before it get so large that there's no way out other than by blowing up your account or declaring bankruptcy. It applies both to equity and real estate investments.