You need to sell a loser stock. Don't wait for it to rebound. It is much easier to recover from a losing position by investing in a good stock that is currently increasing in value. A loser stock that is currently dropping in value is simply dragging your portfolio into the red.
If you have lost 7-10% of your value in a single stock, you need to cut your losses. Jim Cramer, the famed TV investment adviser, often says that it doesn't matter where the company has been. It only matters where it is going. If the loser stock is still going or going sideways, you will need to sell the stock.
A loser stock that has lost a significant amount is not likely to be on the rebound very soon. You will probably need to find another stock that is increasing in value to make up the loss. Sitting on the loser stock and waiting for it to plateau and then regain its value is simply costing you money in lost opportunity costs. It is like throwing good money after bad.
This is even more obvious when you factor in the lost opportunity costs of the loser stock. While you were watching the loser stock decline in value, another great stock was actually increasing in value. So you didn't just lose 7-10%, you actually lost an additional 5-10% since surely another stock was growing at that time. Except for general market corrections, such as what happened in October 2008, some stocks are going up and some stocks are going down. Sticking with a stock that is going down only adds to your losses.
Even the great stocks on my Watch List can be loser stocks at times. They can have a bad quarter or not react well to a current situation. It is important to constantly analyze if the company should get your trading money (it is going up and not down). It is equally important to know if it is time to exit the company completely because it has lost its way. For this reason, I will regularly review the companies on my Watch List and if they are no longer performing satisfactorily, I sell all my holdings.
So when do you know when it is time to sell a loser stock?
Simple - you need to understand technical analysis of stocks. You do not have to be a rocket scientist to do this, you simply need to read my book, "The Confident Investor" to understand the basics. In my book I explain these basic tools.
Unfortunately, if you have not read my book you will probably not understand the details of my technique. You must be an owner of my book and registered on this site as a book owner to see this review. I strongly suggest that if you want to increase your confidence in your investments, you buy my book, "The Confident Investor" and learn how to Grow on Other People's Money.