Definition of Fire sale:
A fire sale consists of selling goods or assets at heavily discounted prices. Fire sale originally referred to the discount sale of goods that were damaged by fire. Now it more commonly refers to any sale where the seller is in financial distress. In the context of the financial markets, a fire sale refers to a situation where securities are trading well below their intrinsic value, such as during prolonged bear markets.
Liquidation of a firms assets at prices far below their fair market value (FMV) to achieve a quick sale, either to avoid a financial disaster or to satisfy the debts of an insolvent or bankrupt firm. Banks and other lenders usually value a firm assets at their fire sale value to judge their worth as collateral.
A fire sale can be an opportunity for investors. Securities that are on fire sale may offer compelling risk-reward payoffs for value investors since further declines in these securities may be limited and the upside potential could be quite substantial. The challenge for investors is making the decision to purchase securities during a fire sale.
A sale of goods remaining after the destruction of commercial premises by fire.
How to use Fire sale in a sentence?
- If you need more room on your shelves for a new product you may need to have a fire sale for your old products.
- In some cases, an individual stock might be in good shape but is available at a discount because the whole sector that it is part of is under duress.
- You may need to have a fire sale and get rid of everything if you need to change the location of your business.
- The fire sale was going on, so we rushed to the store to get some of the amazing prices being offered.
- Thanks to a fire sale at his local public library in Weston, Massachusetts, he picked up several books by J. Edgar Hoover and Whittaker Chambers on the communist threat.
- A fire sale refers to the selling of a security or other product at a price that is well below market value.
- Investors that buy stocks at fire-sale prices are counting on them to rebound later, making it crucial to pick stocks of companies that are primed to recover.
- In the financial market, stocks or other securities are often available at fire-sale prices because the company issuing them is in deep water financially.
Meaning of Fire sale & Fire sale Definition