Traders and investors over the years have come up with some clever expressions. Today I thought I’d share a few.
Bulls make Money. Bears make money. Pigs get slaughtered.
This one makes the point that you can make money either betting with the market or betting against the market in a short sale. People who get too greedy, however, especially if they start to use a lot of leverage, can really lose big.
How to make $1 million trading options. Step 1, start with $2 million.
At one point I thought I could actually trade options and make money despite the fact that 90% of options end up worthless. I was buying index puts and calls and a few equity puts and calls. Somehow I ended up losing about three times as much as I had planned to risk. At least my taxes were low that year.
A dead cat bounce.
The idea is that if it falls far enough, even a dead cat will bounce. An expression used for a stock which has fallen far and then experiences a small rally. Usually it falls back to its past lows after the bounce.
Trying to catch a falling knife.
It is often tempting to buy a hot stock when it is falling in price. You will usually find, however, that just because it seems cheap compared to where it was doesn’t mean that it won’t get cheaper. I usually wait until after the dead cat bounce and then plan to wait a few years to see anything happen.
The shoe shine boy indicator.
When people wore real shoes, there were plenty of shoe shine boys around. When the shoe shine boys started buying stocks and giving stock tips, experienced traders knew it was time to sell out because the rally was way overblown.
The nickname for the American Stock Exchange. Named so because it started out when traders began exchanging stocks on the curb outside of the New York Stock Exchange.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.