A strategy that attempts to force some market participants out of their positions by driving the price of an asset to a level where many individuals have chosen to set their stop-loss orders. The triggering of many stop losses generally leads to high volatility and can present a unique opportunity for investors who seek to trade in this environment. Watch: Stop Loss Order Understanding that the price of an asset can experience sharp moves when many stop losses are triggered can be useful when seeking potential trading opportunities. For example, assume that ABC Company's stock is trading at $50.36 and looks as though it may be heading lower. It is possible that many traders will place their stop losses just below $50, at $49.99, so that they can still hold onto the shares and benefit from an upward move while also limiting the downside. If the price falls below $50, traders expect a flood of sell orders as many stop losses are triggered. This will then will push the price lower and give some traders the opportunity to profit from the decline.
The buying and selling of securities with the intent of generating quick profits. While most investors seek value through long-term investments, stock jobbing takes on a more speculative short-term tone. The term stock jobbing is largely used in reference to the South Sea Bubble - an 18th-century stock that literally wiped out the savings of many British citizens.
A note of suggestion or thinking that initiates the further analysis of a potential investment. Stock ideas can be thought of when news comes across the wire, or when the suggestion is heard from another analyst or investor. Watch: What Are Stocks? The main thing to remember when you hear a stock idea is to approach it as objectively as possible and to look at the positives and negatives along with the potential risks. Too often, an investor will take a position on a security based on what someone else said, rather than performing his or her own analysis of the company.There is no substitute for doing your own homework on a particular firm, and you should never substitute someone else's judgment for your own.
An individual, either acting alone or on behalf of someone else, who attempts to devalue a stock by spreading false or exaggerated claims against a public company. After the stock's price has dropped, the basher, or the basher's employer, will then purchase the stock at a lower price than what he or she believes it is intrinsically worth. This is an illegal activity that can carry significant legal repercussions. The basher is generally paid on the basis of how many lies and negative rumors are spread, which can dramatically affect a stock's value. If an investor believes some of the lies, he or she may sell off the stock at the higher price before it falls. The basher will then purchase the stock and ride out the gains.
Slang for an individual homeowner who strips the equity out of his or her home through mortgage refinancing. The proceeds are generally not re-invested, but spent on consumer goods. Most people get rich by saving and investing wisely. Strippers, on the other hand, feel rich because they have increased their disposable income by going further into debt.Strippers face two huge risks. First, they are trusting that the value of their home will keep rising, but any dip in the housing market will prevent future refinancings. Second, strippers usually borrow when interest rates are low. If they have a variable-rate mortgage and rates rise again (as they always do), they might not be able to afford the mortgage payment. Sooner or later, strippers will have to reduce their consumption and start saving to pay back loans. This situation is a vicious cycle because the deeper into debt a person goes, the harder it is to get back in the black.
A company that has a management team with enough strength and experience to run a public company. It's imperative for Wall Street to have confidence in a company's management - otherwise it will be difficult, if not impossible, for that company to go public. For a company, being "streetable" means that it is of high enough quality to have the respect of The Street. Although individuals are the ones who come to eventually own companies (either directly or through mutual funds), a company must first impress the investment bankers and those on Wall Street to make it to the market.This term was sent by Greg Bohlen, managing director of Wasatch Advisors Venture Investments.
The tendency for mutual funds with poor performance to be dropped by mutual fund companies, generally because of poor results or low asset accumulation. This phenomenon, which is widespread in the fund industry, results in an overestimation of the past returns of mutual funds. Also known as "survivor bias". For example, a mutual fund company's selection of funds today will include only those that have been successful in the past. Many losing funds are closed and merged into other funds to hide poor performance. This is an important issue to take into account when analyzing past performance.
A strategy that hedges positions with a self-financing trading strategy. In an incomplete market, such as options, the cost of such a strategy may prove too high. The idea of super hedging has been studied by academics, however it's a theoretical ideal and is difficult to implement in the real world. A hedging transaction limits investment risk of an underlying asset by using options or futures. The options or futures are bought in opposing postions to the underlying asset in order to lock in a certain amount of gain.