Cutting Losses: An Attempt at Analogy

If you play the stock market and bought a million shares of XYZ Company at 100 pesos per share, then the market price drops to 90 pesos, you instantly lose 10% of your investment if you sell at that price. You'll have to postpone the thought of bringing home that brand new BMW M6 Coupé.

But if all indicators tell you that the stock price will eventually plummet to 5 pesos per share, common sense dictates that you get over the 10% dent, just cut losses and sell immediately.

From that perspective, it's relatively painless to lose 50 million pesos worth of commercials now than 500 million pesos of accumulated expenses on May 2010.

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