A slang term given to investors or other market participants who ignore important pieces of information or situations, which have the ability to impact them or the market in which they operate. The reasons behind type of action can include risk aversion and bias. The investment term is derived from the similarities between investors and these large birds, where in response to a dangerous situation, they stick their heads in the ground. These participants will ignore the market at all costs when it is not working to their advantage, in effect sticking their 'heads in the ground' in response to the stress of the market.
A class of financial intermediary that hires professional investment managers to oversee aspects of a client's investment fund. More specifically, the MOM tracks the performance of each investment manager and has the power to fire ineffective managers and then hire replacements on a client's behalf. Using a MOM to handle investments funds is an alternative to hiring a single investment portfolio manager that makes all the asset management decisions. |||For example, suppose that a teacher's union hires a MOM to invest in its pension fund. The MOM then hires a number of investment managers, such as a bond expert, a money market expert and a large-cap stock expert; each has the responsibility of managing the particular asset class in which he or she specializes. Because no single manager is an expert at investing in all asset classes, using a MOM allows clients to have an expert asset manager working on each aspect of an investment at all times.
A major change in how some process is accomplished. A paradigm shift can happen when new technology is introduced that radically alters the production process of a good. For example, the assembly line created a substantial paradigm shift not only in the auto industry, but in all other areas of manufacturing as well. Paradigm shifts can require that entire departments be eliminated or created in some cases, and millions or even billions of dollars of new equipment purchased while the old equipment is sold or recycled. Paradigm shifts have become much more frequent in the past hundred years, as the industrial revolution has transformed many social and industrial processes. This process is likely to become even more commonplace in the future as our rate of technological advancement increases.
A section of a company's annual report in which management discusses numerous aspects of the company, both past and present. |||Among other things, the MD&A provides an overview of the previous year of operations and how the company fared in that time period. Management will usually also touch on the upcoming year, outlining future goals and approaches to new projects.The MD&A is a very important section of an annual report, especially for those analyzing the fundamentals, which include management and management style. Although this section contains useful information, investors should keep in mind that the section is unaudited.
A nationally recognized, well-established and financially sound company. Blue chips generally sell high-quality, widely accepted products and services. Blue chip companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth. Taobiz explains Blue Chip The name "blue chip" came about because in the game of poker the blue chips have the highest value. Blue chip stocks are seen as a less volatile investment than owning shares in companies without blue chip status because blue chips have an institutional status in the economy. Investors may buy blue chip companies to provide steady growth in their portfolios. The stock price of a blue chip usually closely follows the S&P 500.
Unrealized capital gain (or capital loss) in an investment. It is calculated by comparing the market price of a security to the original purchase price. Gains or losses only become realized when the security is sold. Investors commonly justify bad investment decisions because of paper gains or losses. Two examples:1. Although you officially recognize a transaction when you sell a security, many investors believe they haven't lost any money in a sinking investment because they haven't yet sold it. While you don't have a capital loss for tax purposes, there is a loss in value. 2. On the flip side, the dotcom boom saw many "paper millionaires" created due to stock options. The problem was that rules in options contracts made it impossible for these people to sell their stock and realize their wealth. Consequently, after the dotcom market crashed, many paper millionaires went broke.
A fully automated trading system created by the Boston Stock Exchange and five other financial conglomerates. The BEX offered a high-speed, low-cost alternative to market duopoly. The BEX also provided a superior ability to route market trades electronically and the opportunity for anonymous trade handling and execution. Taobiz explains Boston Equities Exchange - BEX The BEX opened in December of 2006 and was closed on September 5, 2007. It had struggled to gain market share because of the strength of its participants. The BEX's short life raises questions about whether fully automated exchanges can compete with the traditional exchanges and Nasdaq.
When the managers and/or executives of a company purchase controlling interest in a company from existing shareholders. |||In most cases, the management will buy out all the outstanding shareholders and then take the company private because it feels it has the expertise to grow the business better if it controls the ownership. Quite often, management will team up with a venture capitalist to acquire the business because it's a complicated process that requires significant capital.