One of the most intimidating aspects of Wall Street is the seemingly indecipherable jargon that bounces around among traders on a daily basis. Even experienced traders often have no idea where some of the crazy slang comes from. Here’s a list of 10 commonly-used slang phrases from the stock market world.
A blue chip company is a large, solid company that provides a popular service or product and maintains a reputation of dependable performance. Examples of blue chip companies include Exxon Mobile Corp (NYSE: XOM), Proctor & Gamble Co. (NYSE: PG), and Coca-Cola Co. (NYSE: KO). The phrase “blue chip” comes from the world of poker, where the blue-colored chips are typically the highest-valued chips.
A graveyard market is a falling stock market in which sellers are scambling to sell their stocks and no buyers are willing to step in and buy them. Much like an actual graveyard, traders do anything they can to avoid being trapped in a graveyard market.
The floating stock or “float” of a company is the number of shares of that stock that are available for trading. The idea behind the term is that only the shares that are “floating” are free to exchange hands in the market, and restricted and closely-held shares should not be considered part of the float.
In the stock market world, the term “Main Street” is typically used in contrast to the term “Wall Street.” “Main Street” describes the view points, interests, and behaviors of the “typical” stock market investor that might live on any “Main Street” across the country. “Wall Street,” on the other hand, refers to market insiders, large financial institutions, and well-connected political and business figures.
A white elephant is a stock that nobody wants to own because it will never provide good returns. One past example of a white elephant was General Motors Co. (NYSE: GM). The “old” GM’s debt, corporate structure, and union obligations created a hopeless situation prior to its bankruptcy and reorganization. According to Thai folklore, white elephants were once given as gifts to disliked people to intentionally burden them with the cost and effort of keeping them.
Most people know that a bull market is a rising market and a bear market is a falling market, but not everyone knows where these terms come from. A bull attacks a threat by thrusting upward with its horns, and a bear attacks a threat by swiping downward with its paws.
The terms “dovish” and “hawkish” refer to the action or stance that the Federal Reserve takes in a given situation. Doves are very docile and passive creatures, whereas hawks are fierce and aggressive. If the Fed takes a passive approach, its behavior is considered dovish. However, an aggressive interest rate cut would be considered hawkish behavior.
Dead cat bounce
A dead cat bounce is a relatively small, temporary rise in price after a much larger, precipitous fall in price. The idea behind the crude phrase is that even a dead cat will bounce a bit if it is dropped from a large enough height.
Behind the woodshed
When a stock or its shareholders are taken “behind the woodshed,” it means that they are in for a painful loss. The phrase refers to taking an unruly child out of sight to issue a spanking or other punishment.
A pump-and-dump scheme is a scenario in which a group of shareholders attempt to artificially inflate the share price of a stock by spreading false or exaggerated news and rumors about the stock. First the participants “pump” up the share price to unreasonably high levels, and then they “dump” their overpriced shares on unsuspecting buyers for a large profit.
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