One Night Stand Investment

Advance/Decline Line - A/D Definition and Uses

What is a One Night Stand investment

An overnight investment is a purchased security that was intended for a long-term investment, but is sold very quickly instead, several times the next day. Overnight investments are often sold urgently on the trading day after purchase, as the investor regrets buying the stocks to the point where fear and panic begin to set in. It can even lead to immediate short-term losses. An overnight stand investment is typical of an indecisive investor and is related to the area of ​​behavioral finance.

DISTRIBUTE The investment of a night stand

Many things can change overnight in a business and an industry. An investor who searches for an investment and buys it one day, believing that the business and its future is solid, may be distraught and ready to sell the next day when unexpected news threatens his perception of the long-term security of his business. long-term investment. The incidents that cause the sudden sale can include many things, such as company profits falling short, industry changes, acquisitions, and regulatory changes.

An investment in a night stand could also be the result of the stock not meeting expectations, apart from events that may have an impact on the stock, such as a competing business or a natural disaster that ruins a factory where the company is directed. Or, an investment from a night stand could boil down to a simple fear on the part of the investor of having too much of their portfolio wrapped up in one investment. Experienced investors are less likely to have an overnight investment, as they may be familiar with the emotions and fears that can arise from investing. Financial advisers and other stock market professionals may also be able to work with a fearful investor to help reduce their chances of having an overnight investment by encouraging them to invest in or maintain high-quality stocks. a stock before selling quickly.

Example of an overnight stand investment

An example of investing in an overnight stand could be Stan, a young investor very excited about a friend’s promising new business and who buys $ 60,000 in shares in the business on a Monday evening. The next morning, however, Stan wakes up and realizes that he made a big mistake and is scared of investing so much in the company of his friend. He immediately tries to sell his share of the stock, not realizing that such a brutal and significant sale could actually damage the company’s stake and cause panic among other investors as well.

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