Why are paper losses and profits important?
Keeping track of losses and profits on paper will give you an idea of how your investments are performing. For example, the paper value of a stock represents the current price it can be sold for on the market -- but it's not the deciding factor in whether your investment ultimately winds up being a success or failure.
The market price of an asset or equity position can change substantially over time, and a profit or loss doesn't become real until the holding is sold for cash. Accordingly, paper losses and profits merely present snapshots of how investments are performing at a given point in time. These snapshots can be used to shape and inform buying and selling decisions, as well as other financial moves, but returns on investments only become real when the positions are liquidated.
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