| All the Boats Rise |
When the tide comes in, all the boats
rise. When the stock market is quickly rising, there is a tendency for
most stocks to increase in value due to over-optimism. The
opposite is, When the tide goes out, all the boats sink, which is due to
over-pessimism. |
| Bearish |
To believe the market
will go down. |
| Black Monday |
The day the stock market
crashed on October 19th 1987. |
| Black Friday |
The Friday after Thanksgiving, which is a
very popular shopping day for retailers. In the black means
to be profitable. A very recent and annoying cliché, as it
conjures up memories of 1987 and 1929. |
| Black
Tuesday |
The day the stock market
crashed on October 29th 1929. |
| Bottom Fishing |
After a large sell-off or drop in the
market, a slang term for picking oversold stocks. |
| Bullish |
To believe the market
will go up. |
| Buy & Hold |
A foolish method of investing, when you buy
a stock and completely forget about it indefinitely. Jim Cramer's
term Buy & Homework, or to evaluate your portfolio periodically,
is more practical. |
| Castles in the Sky |
When stock prices are extremely overvalued,
and not justifiable by future increases in earnings. 1987 and 1999
are examples, just before large market drops. |
| Chasing Returns |
(1) Taking on more risk to gain a
higher return. Banks buying more SIVs (risky debt) to gain
higher returns had greatly contributed to the liquidity crisis of
2007-NN, as many of the SIV funds became insolvent. (2) When
a group of stocks or the entire market has experienced a high return, and
investors invest more into this group just for that reason. Often P/E Inflation occurs as a result, when such
stocks go up in price while their earnings do not go up quite as much.
[P/E = price divided by earnings.] |
| Closing Bell |
When trading stops on the New York Stock
Exchange and Nasdaq each day, a bell is rung to signal the event. |
| Crash |
A large sell-off (-10%+) in the market in a
single day. |
| Dead Cat Bounce |
After a stock (or even the entire market)
has dropped substantially, there is often a moderate bounce to the up
side. This bounce may be caused by value investors believing the stock
had become undervalued at this beaten down price, or by short sellers
covering their positions as shorting was compounding on the way down. |
| Dovish |
When the Federal Reserve Governors imply
that interest rates may be going down soon. The opposite of
hawkish. |
| Field Bet |
Buying a group of stocks in the same
industry, most often when a group is unprofitable and oversold.
The theory is that some companies may go bankrupt, but one or more may
survive and incur large gains in the stock price. |
| Hawkish |
When the Federal Reserve Governors imply
that interest rates may be going up soon. The opposite of dovish. |
| Joe Granville Wednesday |
The Dow Jones Industrial Average hit 1000 on
Tuesday January 6, 1981, after not reaching 1000 since January 26, 1973.
On Wednesday January 7, 1981, Joe Granville announced in his investment
newsletter to "Sell Everything!". The Dow dropped by more than 7% in the
next six weeks, which made him quite famous. The Dow kept
falling until August, 1982. |
| Limit Down |
Price controls on futures contracts, which
halt trading after a large drop. |
| Merger Monday |
Mergers, or companies buying other
companies, often consummate a deal over a weekend, and then publicly
announce it on a Monday. |
| Nifty Fifty |
A group of 50 large cap overvalued stocks
that greatly influenced the market in the 1960s. |
| Opening Bell |
When trading starts on the New York Stock
Exchange and Nasdaq each day, a bell is rung to signal the event. |
| Painting the Tape |
When a group of investors illegally move a
stock by trading it all at the same time. This happens every day,
just watch the tape or most active stocks, but don't get sucked in.
Day trader newsletter emails can cause such moves. |
| Quadruple Witching Hour |
The final hour of trading on a Friday when
stock index futures, single stock futures, stock index options, and
stock options all expire. This happens on the third Friday in
March, June, September, and December. This used to be called the
Triple Witching Hour. |
| Random Walk |
A 1970s author created a portfolio of stocks
by throwing darts randomly at a newspaper stock price table. The
dart portfolio outperformed the collective results of a sideways market. |
| Rubber Band Effect |
After a large sell-off in the market, there
is a tendency for the market to bounce back right away. It is
caused by computerized trading programs. It's also known as a V
rally due to how it appears on a chart. |
| Sell in May and Go Away |
The market is often seasonal, rising in late
winter at times. The market can run out of steam in May, with
stock prices falling, causing the Summer Doldrums. |
| Shimming |
Stealing a few pennies from trades by
specialists or market makers. See Trading Ahead. |
| Summer Doldrums |
Stocks tend to remain flat or drop during
the summer. Many people are on vacation, with trading volume
usually dropping also. |
| Trading Ahead |
Immoral trading by specialists or market
makers. A specialist might buy a stock for themselves from John Q.
Public even though a better price is available from another public
seller. The specialist can view bid and ask prices and then
manually mis-match them, or see ahead to a less favorable price.
It happens all the time in my experience, just watch how long it takes
for your stop order to execute after the stop price was reached.
This practice is a form of shimming. |
| Triple Witching Hour |
The final hour of trading on a Friday when
stock index futures, stock index options, and stock options all expire.
This happens on the third Friday in March, June, September, and
December. See Quadruple Witching Hour. |
| V Rally |
After a large sell-off in the market, there
is a tendency for the market to bounce back right away. It is
caused by computerized trading programs. The term derives from how
the move appears on a chart. Also known as the Rubber Band Effect. |
