Good question. I think the basic answer is that people do not want to sell because they cannot accept the loss emotionally. It is a bad decision, because if it is a money-losing penny stock it will eventually go bankrupt. When that happens, it will be a total loss. Even if it is difficult to accept a loss by trading prior, it will be gratifying somewhat when it finally succumbs to financial pressure and goes bankrupt or ceases operations in some fashion (with the requisite exit strategy for executives of course). That will come from having made a decision that made you not as worse off as the remaining shareholders.

There are a few (one hand?) on JBI that can count themselves as having come clean and sold. Some of them post. I have had people PM me about their losses, usually 5 figures.

I avoid total losers in the first place. If I make  abad decision I will sell, The loss is outweighed by the good decisions I make, all of them on solid stocks that will not go bankrupt. It is much easier to live with your mistakes that way. With over 50 stocks in my portfolio, I am not too affected by *events*.

This is just human nature, it is much more important than ROI calcs, PEs, charts, anything. Also much more important, and difficult to control for some. Once you understand it... it is an essential tool for a reasonable expectation of success.