👉 Overcapitalization refers to a situation in which an individual or entity invests heavily in assets (often stocks, real estate, or other assets) that are not appropriate or suitable for their investment goals. This can lead to increased risk and potential loss if the investments do not perform well.
Examples of overcapitalization include:
Investing heavily in a particular industry or sector
Overinvesting in high-risk assets like stocks or real estate
Taking on too much debt or issuing