What is a Watered Stock?
Watered stock is an example of a stock or other asset that is promoted with a value that has been inflated by means that are outside the actual market performance. Watered stocks were once a common phenomenon in many trading environments around the world, but rarely appear today. Much of the disappearance of the watered stock as a capital investment is due to changes in the laws that corporations use to issue stocks. The approach derives its name from a strategy used with livestock in the old American West during the 19th century. At the time, cows and other forms of livestock were weighed and sold by the pound. Essentially, the strategy employed forcing excess water into the animals, temporarily bloating the animal and raising the weight. The higher rate resulted in a larger sale price, which directly benefited the seller. At the same time, the buyer would find that the acquired heads of stock would lose a great deal of weight in a very short period of time. Since watered stock involv
Watered stock is an example of a stock or other asset that is promoted with a value that has been inflated by means that are outside the actual market performance. Watered stocks were once a common phenomenon in many trading environments around the world, but rarely appear today. Much of the disappearance of the watered stock as a capital investment is due to changes in the laws that corporations use to issue stocks.
