Close this search box.

Table of Contents

Bag Holder


A bag holder is a term used in financial markets to refer to an investor who holds onto a declining asset, such as a stock or cryptocurrency, with the hope that its value will eventually rebound. This individual may have bought the asset at a higher price, and as the value decreases, they suffer losses. The term often carries a negative connotation, as bag holders are perceived as overly optimistic or uninformed about market trends and asset values.


The phonetic pronunciation of the keyword “Bag Holder” is:/bæɡ ˈhoʊldər/

Key Takeaways

    1. Bag Holder is a term used in the investing and trading community to describe an individual who holds onto a financial asset, particularly stocks, that has significantly depreciated in value.
    2. These individuals are often criticized for not selling their assets in a timely manner, resulting in significant financial losses. Their hope is that the asset’s value will eventually recover to at least the price they initially purchased it at.
    3. Being a Bag Holder is often associated with inexperienced investors, as they may be more prone to investing too heavily in a single asset or lack the knowledge to recognize when it’s time to sell.


The term “Bag Holder” is important in business and finance because it refers to an investor who continues to hold shares of a poorly-performing or plummeting stock, with the hopes that the investment will eventually recover its losses. Bag holders often face substantial financial losses as they hold onto these stocks despite negative indicators or market trends, driven either by emotional attachment or the fear of realizing losses. Being aware of this term is crucial, as it serves as a cautionary reminder for investors to objectively analyze their investments, make informed decisions, and avoid being influenced purely by emotions or unrealistic expectations, ultimately preventing potential financial losses.


A bag holder embodies an essential phenomenon within the realms of finance and investment. Although the notion may not present a direct purpose or utility, recognizing the plight of bag holders offers crucial insights into the potential outcomes of investment decisions rooted in speculation or market hype. Essentially, a bag holder refers to an investor who has purchased an asset at a high price, and subsequently suffered losses as the value of the asset has significantly decreased. The investor continues to hold the worthless or depreciating asset, often in the hope that its value would eventually rebound. In some cases, the investor may be left carrying the metaphorical “bag” long after other wiser investors have recognized the diminishing potential of the asset and liquidated their positions. Understanding the concept of bag holders can serve an educational purpose for both novice and experienced investors, instilling caution against succumbing to market hysteria. By learning from the misfortunes of bag holders, investors can develop more refined methods to evaluate the quality and potential of an asset before committing to a purchase. Moreover, this insight enables a focus on strategic investment approaches, such as thorough fundamental and technical analysis, rather than falling for get-rich-quick schemes that often come with heightened risks. Recognizing the fate of bag holders prompts investors to be more vigilant, cultivating a balanced and informed decision-making process that can mitigate the likelihood of holding on to a depreciating asset and enduring significant financial losses.


The term “bag holder” typically refers to an investor who is left holding the stocks or other financial assets that have significantly decreased in value and are unlikely to recover in the immediate future. Here are three real-world examples: 1. The dot-com bubble: During the late 1990s and early 2000s, numerous investors bought into internet-based startup companies at high share prices, expecting huge profits. However, many of these companies lacked solid business models and eventually went bankrupt or significantly declined in value. Those who held onto their shares during this tech crash, with the hope that the price would recover, were left as bag holders. 2. The 2008 financial crisis: Leading up to the 2008 financial crisis, various investment firms bundled subprime mortgages into complex financial instruments. Many investors bought into these mortgage-backed securities, expecting handsome returns. However, once the housing market collapsed and the subprime mortgage crisis unfolded, the financial assets that were initially attractive turned toxic. Investors holding these assets became bag holders as their values plummeted. 3. Enron scandal: In the early 2000s, Enron, an energy company, inflated its financial statements through false transactions and off-balance-sheet accounting practices, leading to a massive increase in share prices. Many investors were drawn to the seemingly profitable company and purchased the shares at high prices, expecting continued high returns. However, when the accounting fraud was exposed, Enron’s share prices dropped sharply, rendering the investments almost worthless. The investors who held onto their Enron stocks became bag holders.

Frequently Asked Questions(FAQ)

What is a Bag Holder in finance and business terms?
A Bag Holder is an investor or trader who continues to hold onto a declining investment or security, often hoping for a future recovery in value but, consequently, suffering substantial losses.
What causes someone to become a Bag Holder?
People become Bag Holders due to various reasons, such as emotional attachment to a particular investment, lack of knowledge about market trends, or hoping that the asset’s value will rebound despite adverse market conditions.
How can I avoid being a Bag Holder?
To avoid being a Bag Holder, it’s essential to establish a solid investment strategy that includes proper research, diverse portfolio, pre-determined entry and exit points, and risk management techniques to limit potential losses.
What is the origin of the term Bag Holder?
The term Bag Holder is believed to have originated from the Great Depression era, referring to people left “holding the bag” while others divest their stocks and leave them with the devalued investments.
Can Bag Holders ever make a profit?
While it is possible for Bag Holders to see a recovery in the value of their investments, it’s uncertain and often depends on various factors such as market conditions, company performance, or external economic factors.
Is being a Bag Holder always a bad thing?
Not necessarily. Holding onto a declining investment may sometimes lead to a recovery and eventual profits if the underlying asset is fundamentally strong. However, it is crucial to carefully evaluate the investment and market conditions to determine if continued holding is a viable strategy, or if it’s best to cut losses and divest.
What is an example of a Bag Holder situation?
A common Bag Holder situation is when an investor buys shares in a company during a hype-driven increase in value, only for the stock price to crash afterward. The investor then holds onto the shares, hoping they will recover in value while continuing to suffer losses.

Related Finance Terms

Sources for More Information

About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More