Would I be correct In saying that if the person who bought in at the 20.5c is still holding there shares, since there worth a lot less now wouldn't it be better to just let them sit and wait to see if there's any rise in the future?
Is that a correct method of thinking or am I missing something?
And no that wasnt me that bought at the 20.5c thankfully
No, Beau, that's not the correct method of thinking.
You're missing the "opportunity cost". That means, if you bought a parcel for twice or three times its worth, with little or no hope of it actually getting back up, you're better off copping the loss early on the way down.
Take the example where someone poured $4,100 into 20k shares at the top. Assume that was you.
Shortly after, Blind Freddy's dog would have realised that it was a con and it's on the way down again.
Imagine you had been quick and sold those 20k again at 15c, getting $3,000 back into your bank.
Compare having those $3,000 to the alternative situation, where you "just let them sit and wait" - hoping for a miracle.
Where did PSY shares close? At 5.5c. Chances are, they'll drop even lower. But even if not, they'd need to almost quadruple from here in order for your 20k parcel to be worth again what you paid for it. Check out, how many shares have done that in the past within a short period of time. You're asking for a miracle!
IF the unlikely recovery is going to happen, you'd be much better off having rescued $3,000. You could then buy 50k at around 5.5c and still have change left over for a stiff whiskey. And for your position to lift your "net worth" back to those original $4,100 (in other words: for you to break even), PSY has only to recover to 8.2c - much more likely than 21.
Every tick that it rises above 8.2c would be profit, multiplied by 50k.
Keeping the 20.5c parcel in the bottom drawer will deprive you of that opportunity - as well as all other possible opportunities, where you might identify a share that is about to take off and would let you put your rescued $3,000 to even better use. (Hence the term "opportunity cost": A lost opportunity can cost you dearly.)