It is fair to say many ASX share portfolios would be in the red this year.
Unless you were fortunate enough to plough your money into mining shares at the start of the year, your wealth-on-paper likely will have reduced in 2022.
Some stocks, especially high growth ones, have shrunk to a mere shadow of what they used to be in those glory years of 2020 and 2021.
It's all good and well for commentators to espouse holding for the long term, but if your investment has fallen 80% during this bear market then it now needs to become a 5-bagger for you to merely break even.
Are you confident that's even possible as interest rates continue to climb? As rates get higher, there's a greater chance that the economy will crash into a nasty "hard landing".
Couldn't that money be put to better use?
According to Marcus Today senior market analyst Henry Jennings, this is why selling is so much more difficult than buying ASX shares.
"It is one of the hardest things to do and one of the most neglected," he said on the Marcus Today blog.
"It came up as a question at the course I do for the kids the other night with one of the mums. She had bought a stock that had tanked and wanted to know when to sell."
'The market is bigger than you are. Always was, always is'
Selling is hard enough as it is. But when it comes to ASX shares that have plunged beyond recognition, the decision is even more difficult.
"How do you cut a losing position that has gone so bad that you cannot even bear to look at it?" asked Jennings.
"What do you do? Do you just cut and move on? Do you bottom-drawer it? It could be a lottery ticket without an expiry date? Frequently not. Or do you average down?"
The most important action in this position is to take the emotion out of it, according to Jennings. Focus on the original reasons for investing in this company. Do those factors still ring true?
Sometimes the investment thesis still holds, and the market has simply miscalculated the company's worth.
"It does not always value things properly — so maybe, just maybe, the investment case still adds up," said Jennings.
"But don't be stubborn and don't be so chock full of hubris that you think you are right no matter what. The market is bigger than you are. Always was, always is."
Have a bet each way
For ASX shares that have fallen devastatingly, Jennings suggests a compromise.
First, you set what he calls a "sift stop loss" for that stock. That's the share price at which he evaluates "if all the reasons I bought it for still hold".
At this point if Jennings can't quite decide whether to cut or hold, he decides to sell some — not all — of his holding.
"It makes me feel that I am doing something and if it keeps going down then I can buy back more at lower levels and if Sod's Law comes into play and it bounces then I still have some."
This method works for Jennings, but he freely admits it doesn't suit everyone.
"My risk appetite is probably greater than others. I screen watch all day every day."
He points out that investors are often afraid to exit a position as if they're breaking up with a partner.
But selling is not goodbye forever, and ASX shares have no memory of how you treated them in the past.
"If you need to clear your mind, you can always sell and get back in again at another time," said Jennings.
"You are not barred for life from a stock."
