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A loss refers to reduction in the value of an investment, or in business terms, to having expenses outweigh revenues.
In a company’s fiscal year, if their operating and total expenses outweigh their revenues, they are operating at a loss. If those companies are not supported by private capital and operate at a loss for too long, it can easily lead to bankruptcy or closure. Newer businesses often run at a net loss for the first few years, while they rush to build labor and capital infrastructure, with costs such as equipment, buildings, technology, employees, and rights.
With investing, a loss is incurred when an investor sells an asset for less than they purchased it for. There is quite a big difference between a realized loss and a paper loss, the latter of which is not technically a loss until the investor decides to sell. In some tax situations, losses can be used to offset gains, so in some cases investors may intentionally “harvest losses” for tax purposes.
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