Definition

Noun: An unrealized loss on an investment. It represents the decrease in the current market value of an asset compared to its purchase price or book value. This loss is only "on paper" because the asset has not yet been sold; the loss becomes realized only upon sale.

Usage

The term is used primarily in finance and investing to describe a temporary decline in an investment's value. It emphasizes that the loss is not final or actual until the position is closed.

Examples

• The stock's price dropped, so my portfolio shows a paper loss, but I believe it will recover.
• He is not worried about the paper loss on his bonds because he plans to hold them until maturity.
• The quarterly report indicated a significant paper loss on the company's investment holdings due to market volatility.

Advanced Usage

• "To realize a paper loss": This phrase describes the act of selling an asset at a lower price than its purchase price, thereby converting the theoretical paper loss into an actual, realized financial loss. This action can sometimes be used for tax purposes (tax-loss harvesting).
  • Example: The investor decided to realize the paper loss to offset capital gains taxes.

Variants and Related Words

• Paper gain / Paper profit (n): The conceptual opposite of a paper loss; an unrealized increase in the value of an asset.
  • Example: She has a large paper gain on her early investment in the tech company.
• Unrealized loss (n): A more formal synonym for paper loss.
• Mark-to-market loss (n): A specific accounting method that can result in recognizing a paper loss by valuing an asset at its current market price.

Synonyms

• Unrealized loss
• Theoretical loss
• Notional loss

Antonyms

• Paper gain
• Paper profit
• Unrealized gain
• Realized profit

Related Phrases

• "It's only a paper loss": A common saying to downplay a temporary market decline, suggesting the investment should be held with a long-term perspective.
  • Example: Don't panic and sell now; remember, it's only a paper loss until you sell.

Noun

1. an unrealized loss on an investment calculated by subtracting the current market price from the investor's cost