Capitulation
Capitulation is a financial term that refers to the act of surrendering or giving up. It is often used to describe the situation when investors sell their stocks or other investments in a market, usually in response to a large drop in prices. This can lead to a rapid decrease in the value of the market, as investors are no longer willing to hold onto their investments. Capitulation is often seen as a sign of a market bottom, as it signals that investors have given up hope of the market recovering and are now selling off their investments.
History of Capitulation
The term capitulation has its roots in the military, where it was used to describe the surrender of a defeated army. In the financial world, the term was first used in the late 19th century to describe the situation when investors sold off their stocks in response to a large drop in prices. This was seen as a sign of desperation, as investors were no longer willing to hold onto their investments in the hope of a market recovery.
The term has since been used to describe similar situations in other markets, such as the foreign exchange market and the commodities market. In each case, capitulation is seen as a sign of a market bottom, as investors have given up hope of the market recovering and are now selling off their investments.
Comparison Table
| Term | Definition |
|---|---|
| Capitulation | The act of surrendering or giving up. |
| Market Bottom | The lowest point in a market cycle. |
| Investors | People who buy and sell stocks or other investments. |
Summary
Capitulation is a financial term that refers to the act of surrendering or giving up. It is often used to describe the situation when investors sell their stocks or other investments in a market, usually in response to a large drop in prices. This can lead to a rapid decrease in the value of the market, as investors are no longer willing to hold onto their investments. Capitulation is often seen as a sign of a market bottom, as it signals that investors have given up hope of the market recovering and are now selling off their investments.
For more information about this term, you can visit websites such as Investopedia, The Balance, and Investing.com.
See Also
- Market Cycle
- Bear Market
- Bull Market
- Market Volatility
- Market Risk
- Market Sentiment
- Market Psychology
- Market Correction
- Market Crash
- Market Panic
