What is Take a Bath?

To 'take a bath' means to take a large loss.

How Does Take a Bath Work?

John Doe buys Company XYZ shares at $10. Two weeks later, the stock tanks to $2 a share. John Doe has to sell the shares because he has to pay an outstanding tax bill and needs the cash. He sells at a big loss and takes a bath.

Why Does Take a Bath Matter?

Much like cats, investors hate taking baths.