This is the selling point for an investor when he is in “doubt”. Usually, when a shareholder believes that the price of the shares he is holding is going to crumble, the shareholder is willing to sell the shares even at the losses.
For instance, if Mr. A had purchased certain shares in a company with the hope that the prices of the share will go up. However, he now believes that due to some reason the prices are likely to decline. In order to stop incurring losses, he sells the shares he held in that company without waiting for the prices to rise again. This is known as a puke point.
In this scenario, the shareholders do not wait for the prices of the shares to rebound and instead save themselves from incurring further losses. Therefore, some other sets of investors wait for the shares of a company to reach their puke point and once they do, they hope that the existing shareholders will exit (puke) without waiting for the shares to rebound. Hence, they will buy shares of a reputed company at a much cheaper price in a hope that the prices will rebound.
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