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Cockroach Theory

In finance, the “cockroach theory” is the assumption that any negative news released by a company or other market player only reveals a small part of a much bigger problem with the company or industry as a whole.

The cockroach theory gets its name from the fact that the sighting of a cockroach in a building usually indicates a much larger, hidden cockroach infestation.

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Editor Daniel Dreier

Daniel Dreier is editor and personal finance expert at moneyland.ch.

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