- Catch a Falling Knife: This refers to investors who try to time the bottom of a stock or stock market decline. Buying at a bottom can be a good thing (if you think prices will then go up), but you have to time it right. It’s like catching a falling knife: if you’re lucky, you grab the handle. If not, you’re heading to the ER.
- The Trend is Your Friend: This taps into the idea that it’s more lucrative to invest with a market trend than against it. So a stock (or stock market) that’s heading higher will generally continue to do so in the near future. It’s a popular tenet with so-called “momentum investors” who ride these trends. Just be aware: the trend can turn out to be a very fickle friend.
- Dead Cat Bounce: Dark humor alert: this phrase refers to the idea that even a dead cat will bounce if it’s thrown from something high enough. Traders use it when a long-declining stock or stock market suddenly sees a small uptick. The idea is that this uptick is temporary.
Talk it out: Have you come across any Wall Street words you find confusing?
photo source: FOXBusiness.com