Not All Stocks Recover: The Cost of Waiting to Break Even

One of the most common things I hear from investors is: “I’ll sell when the stock gets back to what I paid for it.”

It sounds like a reasonable plan. After all, who wants to lock in a loss? But here’s the uncomfortable truth: not all stocks recover. Some never come close. And waiting around to “get back to even” can quietly erode years of opportunity for your money to grow elsewhere.

The Myth of Inevitable Recovery

The stock market as a whole has an incredible track record of bouncing back from setbacks. That’s because markets are diversified, made up of thousands of companies across industries and countries. As some businesses fail, others rise to take their place

But an individual stock is not the market. A single company’s fate depends on its business model, management, competitive position, and ability to adapt. History is littered with once-great businesses that never regained their former glory.

The Graveyard of “I’ll Wait to Break Even”

A few examples paint the picture:

• Nortel: At its peak in 2000, Nortel made up over 30% of the Canadian stock market. By 2009, it was bankrupt. Anyone waiting to “get back to even” was left with nothing.
• Kodak: The photography giant invented the digital camera but refused to embrace it. Instead of recovery, it filed for bankruptcy in 2012.
• Blockbuster: Once dominant in video rentals, it laughed off Netflix and was gone by 2010.
• BlackBerry (Research in Motion): Once the leader in smartphones, its stock collapsed from over $140 to under $5. Still alive, but it never recovered for investors

These aren’t obscure penny stocks, they were household names and investor favourites

Why We Struggle to Let Go

Behavioural finance explains why this trap is so common:

• Anchoring bias: We get fixated on our original purchase price. It becomes the “fair” value in our minds.
• Loss aversion: Losses hurt about twice as much as gains feel good. Selling feels like admitting defeat.
• Opportunity cost: While you wait and hope, your money is tied up. It’s not working for you in healthier parts of the market.

It’s like keeping a dead plant in your garden because you remember what it looked like when you bought it. Meanwhile, you could have planted something new that actually grows

The Math of Losses

Losses are harder to recover than they look on paper:

• A stock that falls 50% has to double just to get you back to even.
• A 75% drop? That requires a 300% rebound.
• Many companies never deliver that kind of recovery.

Cisco, for example, peaked during the dot-com bubble in 2000. Even 20 years later, it still hadn’t fully regained its all-time high price. Investors who waited were stuck in limbo while the broader market moved on

What to Do Instead

The lesson here isn’t that you should never take risks. But it’s easy to get caught up in picking individual stock names, and when they don’t work out, it’s even easier to ride them lower because of emotional bias. Here’s what we do differently:

• Diversify broadly: When you own the market, you don’t have to guess which companies will survive. While markets can move up or down in the short term, history shows a long-term trend of growth across most horizons.
• Stay disciplined: Use a rules-based investment process. Rebalance by trimming assets that have gone up in value and buying more of those that have declined. This is far healthier than simply hoping one stock eventually gets back to even.
• Accept that losses happen: Selling at a loss doesn’t mean you failed; it means you’re reallocating to a better opportunity. Even if a stock does eventually recover, the key question is: what growth might you have missed elsewhere while you waited? The past can’t be changed  as investors, we’re only rewarded for future growth

The truth is, investing isn’t about being “right” on every stock. It’s about building wealth consistently over time, and that means not letting one bad decision drag down your future opportunities.

Final Thought

Stocks don’t owe you a recovery. Some never bounce back, no matter how long you wait. The smartest move is to recognize that early, let go of the emotional baggage, and keep your portfolio focused on where growth is happening.

Because the real goal isn’t to “get back to even.” The real goal is to move forward.

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This information has been prepared by Brandt Butt who is an Investment Advisor and Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor and Portfolio Manager can open accounts only in the provinces in which they are registered.

iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and a business name under which iA Private Wealth Inc. operates.