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Garbatrage

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Garbatrage
An increase in price and trading volume in a particular sector of the economy that results from a recent takeover creating a change in sentiment towards the sector. Also known as rumortrage.

Notes:
The term is usually used in reference to firms 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.


Garbatrage
Rising stock prices and increased market activity in an entire sector caused by a psychology change stemming from a major takeover involving two companies in the sector. Speculators feel other takeovers are likely in the sector. See: Rumortrage.

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