Have you ever heard the word: capitulation? You surely have if you listen to the financial news or read the financial newspapers, magazines or print articles. It’s one of those financial terms that kind of glides by you. You understand most of what is being said or written but there’s always that phrase or word or concept that mentally catches in the cobwebs of your understanding, and…before you can think about what it might mean, the commentator is on to other more interesting or pertinent topics.
As usual, I go to Investopedia.com for a definition, here it is:
“Throughout even the longest uptrends, investors experience declines against the main trend. These are referred to as corrections. At other times, markets correct more than expected in a short period of time. Such occurrences are called crashes. Both of these can lead to a misunderstood situation called capitulation.”
CNBC gives examples of capitulation in their article Capitulation: CNBC explains.
Here’s a quote from The Telegraph of the word capitulate being used to describe current negotiations between Greece and the European Union:
” ‘Crucified’ Tsipras capitulates to draconian measures after 17 hours of late night talks: as it happened Prime minister Tsipras forced to concede to toughest measures ever imposed on eurozone economy in return for opening talks on a new rescue package worth €86bn”
Author’s Addendum (9/13/2015): Here is an article written by Mark Koba of CNBC, Capitulation: CNBC Explains.