When your significant other fakes a headache at the office holiday party so you can get out of there and get back to binging Unbreakable Kimmy Schmidt at home. One form of exit strategy.
In finance, the exit strategy is the second half of making money from a trade. Many investors spend a lot of time figuring out what stocks to buy. But you need to sell the stock eventually to book a profit. Sometimes harder than it sounds.
An exit strategy is all about this end of the trade. It's about getting out of a position profitably and having a contingency plan for different situations.
You buy shares of Tiger Phone Inc., a maker of cheap cell phones, at $10 a share. The exit strategy should depend on why you bought the stock.
If you bought the stock because you expect a strong response to the upcoming release of its Siberian X model, then you might look to sell ahead of the launch. Wait too long, and you might miss your window.
Meanwhile, if you did fundamental research and found that, based on earnings and revenue, the company should be valued at $12 a share, your exit strategy might be to wait until the stock hits that level and then sell.
But what if it dips to $9? Maybe you buy more shares, with the idea that it has even more value at the lower price. Or maybe you sell in order to limit any losses, in case you were wrong about your initial assessment. All these contingencies are part of developing a cogent exit strategy.
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Finance: What is an IPO?25 Views
And finance allah shmoop What is an i p o
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both well actually most people just spell it out I
po It stands for initial public offering In the three
words tell the story and i pl refers to a
company who's raising money by selling shares of itself to
the public for the first time a maiden voyage in
public funding if you will Whatever dot com has forty
million shares outstanding after three private rounds with venture capitalists
and private investors it wants to raise money to go
big internationally And for the first time it will offer
shares to joe and jill public And that means that
all of it shares will be tradable publicly on the
open market like on nasdaq or the new york stock
exchange That is the insiders early investors founders et cetera
will be able to just call their broker at schwab
or fidelity or wherever and sell their shares get liquid
and buy themselves a maserati because it's not what everyone
does after a nice meal So whatever dot com sells
ten million shares a twelve bucks each to raise one
hundred twenty million dollars which they can spend to build
out offices all over the world So yeah that's an
ai po and that's Why a company generally wants to
make shares available to the public because once you've made
an initial public offering and you make money off the
sales of your stock you khun by as many hippos
as you like and just remember to feed them three
times a day they get Cranky if they go too 00:01:35.158 --> [endTime] long in between No
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