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Suppose you have n shares of stock X, and you're trying to decide whether to sell or to hold onto it for a bit longer; and suppose that if you instead had the current cash value of those shares, you would easily decide not to buy those shares. So it would seem that this amount of money is currently worth more to you as available cash than as shares of this stock. Yet if you already have those shares, particularly if you bought them at a higher price, you may be reluctant to sell them immediately — you'd be inclined to hold onto it in hopes of recouping your loss, even if, given those shares' value in cash instead, you could think of a better use for it than investing it back in the same stock.
Questions:
I think I would call it either the sunk cost fallacy, or the endowment effect/bias.
The latter because you are equally uncertain about whether its value will go up or go down, and so its value to you ought to be exactly its (current) cash-equivalent, and in fact, less because presumably you are risk-averse like all other humans (and so an equal chance of loss or gain is worse than a guaranteed no-loss/no-gain) - and yet you are still holding the stock.
If there are some kind of taxes/fees/whatever on buying/selling stock so that if you buy a certain number of shares and sell them back immediately there's a fraction of your money you don't get back, then...
This does happen a lot among retail investors, and people don't think about the reversal test nearly often enough.
There's a closely related bias which could be called the Sunk Gain Fallacy: I know people who believe that if you buy a stock and it doubles in value, you should immediately sell half of it (regardless of your estimate of its future prospects), because "that way you're gambling with someone else's money". These same people use mottos like "Nobody ever lost money taking a profit!" to justify grossly expected-value-destroying actions like early exercise of options.
However, a bias toward holding what you already own may be a useful form of hysteresis for a couple of reasons:
There are expenses, fees, and tax consequences associated with trading. Churning your investments is almost always a bad thing, especially since the market is mostly efficient and whatever you're holding will tend to have the same expected value as anything else you could buy.
Human decisionmaking is noisy. If you wake up every morning and remake your investment portfolio de novo, the noise will dominate. If you discount your first-order conclusions and only change your strategy at infrequent intervals, after repeated consideration, or only when you have an exceptionally good reason, your strategy will tend towards monotonic improvement.
That's called the house money effect (from Thaler & Johnson, 1990).