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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated August 5, 2020

What is Capital Flight?

Capital flight is the movement of capital from one country to another, or sometimes from one investment sector to another, to capitalize on returns or mitigate risk.

How Does Capital Flight Work?

Let's say the Venezuelan government is overthrown. The new government begins nationalizing many industries and even begins seizing assets from oil companies, banks and some manufacturers.

Because the investors in these companies are essentially having their property stolen, the region becomes an undesirable place to put money. Accordingly, there is a big sell-off in Venezuelan stocks as investors pull their money out of the country and reinvest it in other countries.

Why Does Capital Flight Matter?

Capital flight can devastate markets that suddenly look undesirable, though this event can benefit other markets as investors look for better places to put their money. The concept weighs heavily on the minds of developing economies that are trying to attract investment yet may be experiencing political instability or financial crises.

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At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Capital Flight.
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Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Capital Flight, then please ask Paul.

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