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Definition of 'Garbatrage'
An increase in price and trading volume in a particular sector of the economy that occurs as a result of a recent takeover, which initiates a change in sentiment toward the sector.
Garbatrage is also known as "rumortrage".
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Investopedia explains 'Garbatrage'
Garbatrage is usually used to refer to firms that are not directly related to the takeover. Speculators feel that the initial takeover is a precursor to more takeovers within the sector. Proponents of behavioral finance theory would view this psychological impact as evidence that supports their theory.
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