That’s not true if a stock is truly about fraud or likely to just be bogus. 10% is a lucky outcome if you’ve been had.
I’m not of that opinion, but i have watched friends hold all the way down on such stocks, and knowing better, and being told better, only to get the fewest of pennies per dollar to nothing at the end.
I am holding and i did not buy so early that i have that kind of stress or worry. But even for people up right now, if they were of that opinion... they make a decision by holding or selling. Either way.
As i said, i am happy with my holdings and hope for the best, myself. But i tend to believe if i have a bad feeling or instinctively know something about a company, of course backed up with data and due diligence, then it is up to me to make my own decisions whether to hold, buy more when it is down, take a loss against a gain and reposition, or entirely abandon that stock.
It’s not an easy task for those who ride a stock all the way down. But averaging and repositioning, taking losses against gains, in a portfolio of companies, all of those things can help a bit.