Overstay

AAA

DEFINITION of 'Overstay'

The act of holding an investment for too long. It often occurs when traders attempt to time the market by identifying the end of a price trend and the beginning of a new one, but, due to greed and fear, tend to overstay their positions. This usually results in reduced gains or, worse, further losses.

INVESTOPEDIA EXPLAINS 'Overstay'

Knowing when to sell or get out of an investment is just as important as knowing when to get in. However, timing the market correctly is a task that even professional investors and traders find difficult to accomplish on a consistent basis, so attempting market timing is not recommended for the average investor.

RELATED TERMS
  1. Buy And Hold

    A passive investment strategy in which an investor buys stocks ...
  2. Market Timing

    1. The act of attempting to predict the future direction of the ...
  3. Trend

    The general direction of a market or of the price of an asset. ...
  4. Fallen Angel

    1. A bond that was once investment grade but has since been reduced ...
  5. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  6. Falling Knife

    A slang phrase for a security or industry in which the current ...
RELATED FAQS
  1. How is portfolio variance reduced in Modern Portfolio Theory?

    According to modern portfolio theory, or MPT, portfolio variance can be reduced by diversifying a portfolio through the inclusion ... Read Full Answer >>
  2. What are the advantages of portfolio planning with the efficient frontier?

    The advantages of portfolio planning with the efficient frontier are based in Harry Markowitz's modern portfolio theory (MPT), ... Read Full Answer >>
  3. Which is better: dollar cost averaging or value averaging?

    Historical comparisons seem to indicate that value averaging (VA) tends to outperform dollar cost averaging (DCA), offering ... Read Full Answer >>
  4. What does the information ratio tell about the design of a mutual fund?

    The information ratio can tell an investor how well a mutual fund is designed to deliver excess or abnormal returns as well ... Read Full Answer >>
  5. What are the best free online resources to compare no-load mutual funds?

    Morningstar, Inc. is a well-known investment research firm that offers extensive market data and stock and mutual fund analysis. ... Read Full Answer >>
  6. How do I calculate my portfolio's investment returns and performance?

    The first step in calculating returns for your investment portfolio is identifying and gathering the requisite data. Once ... Read Full Answer >>
Related Articles
  1. Investing Basics

    The Five Biggest Stock Market Myths

    Stocks that go down must come up, right? Wrong. We bust this myth and four other common market misconceptions.
  2. Active Trading Fundamentals

    A Look At Exit Strategies

    Setting appropriate exit points should help you avoid taking premature profits or running losses.
  3. Investing

    The Art Of Selling A Losing Position

    Knowing whether to sell or to hold is tough. And no rule fits all. Find out what to consider.
  4. Entrepreneurship

    MLPs: Is Now the Right Time to Invest?

    Here's what you need to know about MLPs, those under-the-radar investment vehicles.
  5. Professionals

    Indexing vs. Stock Picking: Which is Better Now?

    Indexing and stock picking both have positive and negative features. One has outperformed the other historically, but which is the better option right now?
  6. Economics

    What are Deliverables?

    Deliverables is a project management term describing an object or function that must be provided or completed by a certain due date.
  7. Investing

    Two Heads Are Better Than One In Finances

    Given the importance of a retirement account, having professional help with savings accounts is far more important than a personal chef or chauffer.
  8. Trading Strategies

    Why Volatility Is Your Friend

    Instead of looking at falling share prices as something negative, investors should view it as an opportunity to acquire ownership in fundamentally strong companies at low prices.
  9. Professionals

    Financial Advisors Are Showing the Love for ETFs

    ETFs surpass mutual funds in popularity among financial advisors for the first time.
  10. Taxes

    The Risks of Investing in Art and Collectibles

    Investing in art and collectibles has the potential to lead to a big payday, but it's often a difficult road.

You May Also Like

Hot Definitions
  1. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  2. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  5. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
  6. Risk-Return Tradeoff

    The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!