Continuing to commit resources to a failing course of action because of resources already invested, rather than assessing the future prospects independently.
Deeper Explanation
In investing, the sunk cost fallacy appears as "I can't sell at a loss — I have too much invested in this." But the money already spent is gone regardless of the sell decision. The only relevant question is: given current information, is the best use of this capital in this position, or somewhere else? A stock bought at ₹1,000 now trading at ₹400 should be evaluated exactly as if you were considering buying it today at ₹400. If the answer is "I wouldn't buy it at ₹400," that is a strong signal to sell. Past prices, past research hours, and past conviction are irrelevant to the forward decision.
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