Replies to post #389012 on Mr Cooper Group Inc (COOP)

[rainbow1111]

Now I'm not saying one should ACTUALLY sell the non-performing stock and buy it back every day. I'm saying that for every day we keep a stock, it's as if we're selling it and buying it back the same day. There is opportunity cost in keeping a stock. If I own ABC stock, and it looks like it's going no where, why shouldn't I sell it and buy a stock that has better prospects?

If I paid $10,000 for ABC and now it's worth $4,000, shouldn't I sell it and buy XYZ stock that looks like it could triple in a few years? So my $4,000 has the potential to grow to $12,000 (or more). The lost potential of $8,000 is the opportunity cost of not selling the ABC stock.

http://www.investopedia.com/terms/o/opportunitycost.asp

Definition of 'Opportunity Cost'
1. The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.

2. The difference in return between a chosen investment and one that is necessarily passed up. Say you invest in a stock and it returns a paltry 2% over the year. In placing your money in the stock, you gave up the opportunity of another investment - say, a risk-free government bond yielding 6%. In this situation, your opportunity costs are 4% (6% - 2%).

Investopedia explains 'Opportunity Cost'
1. The opportunity cost of going to college is the money you would have earned if you worked instead. On the one hand, you lose four years of salary while getting your degree; on the other hand, you hope to earn more during your career, thanks to your education, to offset the lost wages.

Here's another example: if a gardener decides to grow carrots, his or her opportunity cost is the alternative crop that might have been grown instead (potatoes, tomatoes, pumpkins, etc.).

In both cases, a choice between two options must be made. It would be an easy decision if you knew the end outcome; however, the risk that you could achieve greater "benefits" (be they monetary or otherwise) with another option is the opportunity cost.