What is a 'One Night Stand Investment'

A one night stand investment is a purchased security that was intended for a long-term investment, but is instead sold very quickly, many times as soon as the next day. One night stand investments are often sold urgently on the trading day after purchase, because the investor regrets buying the shares to such a degree that fear and panic begin setting in. This can even lead to immediate, short-term losses. A one-night stand investment is typical of an indecisive investor and is related to the field of behavioral finance.

BREAKING DOWN 'One Night Stand Investment'

Much can change overnight in a company and an industry. An investor who researches an investment and buys one day, feeling that the company and its future are strong, may be panic-stricken and ready to sell the next day when unexpected news threatens his or her perceptions of the security of his or her long-term investment. The incidents instigating the sudden sale can include many things, such as the company's profits missing their target, industry shifts, acquisitions and regulatory changes.

A one night stand investment might also be the result of the stock not living up to expectations, outside events that may impact the stock, such as a competing company or a natural disaster that ruins a factory where the company is run. Or, a one night stand investment might boil down to simple fear on the investor’s part of having too much of their portfolio wrapped up in one investment. Experienced investors have a decreased likelihood of having a one night stand investment because they may be familiar with the emotions and fears that can happen with investing. Financial advisors and other stock market professionals may also be able to work with a scared investor to help them decrease their chance of having a one night stand investment by either encouraging them to invest in high quality stocks or to maintain a stock before selling rapidly.

Example of a One Night Stand Investment

An example of a one night stand investment could be Stan, a young investor who is very excited about a friend’s new up-and-coming company and purchases $60,000 in stocks in the company on a Monday evening. The next morning, however, Stan wakes up and realizes that he has made a grave mistake and is filled with fear about investing so much in his friend’s company. He immediately tries to sell off his share in the stocks, not realizing that such an abrupt and significant sale could actually damage the stake of the company and cause panic in other investors as well.

  1. Saturday Night Special

    A Saturday Night Special is now an obsolete takeover strategy ...
  2. Panic Selling

    Panic selling refers to wide-scale selling of an investment, ...
  3. Panic Buying

    Panic buying is a type of behavior marked by a rapid increase ...
  4. Standing Mortgage

    A standing mortgage can be contrasted with a normal mortgage ...
  5. Regret Theory

    Regret theory states that people anticipate regret if they make ...
  6. Investment

    An investment is an asset or item that is purchased with the ...
Related Articles
  1. Investing

    How You Could Have Made Money Between the Trump Win and Opening Bell

    There's money to be made on election night, even after the markets close. Here's how you could have done it last night.
  2. Investing

    Amazon, Twitter, YouTube Considering Bidding 'Hundreds of Millions' for NFL Rights

    Tech companies are reportedly queuing up for the rights to stream Thursday night NFL action.
  3. Personal Finance

    Don't Let Today Guy Destroy Your Financial Future

    Use these tips to help yourself make good financial choices today so you have a better tomorrow.
  4. Financial Advisor

    Should You Manage Your Friends Money?

    Investing for a friend isn't worth the amount of trouble it can cause. Money just isn't something you want to bring into a good friendship, find out why.
  5. Personal Finance

    Review: Chase IHG Rewards Club Select Credit Card

    This rewards card gives you instant platinum elite status at more than 4,700 Intercontinental Hotel Group properties. Does that make it worth having?
  6. 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.
  7. Personal Finance

    Including Personal Safety Costs in Your Budget

    What are the costs of keeping yourself and your money safe? Here we try to come up with an estimate.
  8. Trading

    Understanding Investor Behavior

    Discover how some human tendencies can play out in the market, posing the question: are we really rational?
  9. Investing

    Challenges for Self-Employed Finance Professionals

    Going solo in financial services can present a host of unexpected challenges.
  10. Investing

    How To Avoid Emotional Investing

    Most investors buy high and sell low, but you can avoid this trap by using some simple strategies.
Trading Center