Shakeout

For the earthquake safety exercise, see Great Southern California ShakeOut.

Shakeout is a term used in business and economics to describe two things:

A shakeout refers to a period in which rapid growth and overexpansion in an industry is followed by consolidation.[1][2] When this happens, stronger companies use their capital reserves to acquire or eliminate weaker companies that have overextended themselves.[1] Large, diversified companies that are able to endure a weak business climate benefit from shakeouts.[2]

A shakeout also refers to a situation in which many investors exit their positions, often at a loss, due to uncertainty in the market or bad news circulating around a particular security or industry. This type of shakeout is also known as a market selloff or market correction.[1] A shakeout of investors and internet businesses occurred during the dot-com bubble.[1]

References

  1. ^ a b c d Halton, Clay. "Understanding Shakeouts: Stock Trading and Industry Trends Explained". Investopedia. Retrieved July 25, 2007.
  2. ^ a b Scott, David L. (1998). Wall Street Words. Houghton Mifflin. p. 321. ISBN 0-395-43747-4. Retrieved July 25, 2007.
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