Beginner's glossary
Bear
Describing someone as bearish does not mean they are large and hairy, but that they have a cautious and conservative outlook, and are more inclined to be pessimistic. A bear market is characterised by falling share prices and poor returns. Bear times are bad times
Bear squeeze
Not a hug from a grizzly, but a slight rise in share prices after they have fallen sharply as traders who have been short selling buy back their positions
Bull market
Share prices are consistently rising. Think “bull in a china shop” – excited, but potentially dangerous
Bear market
Share prices are consistently falling. Think bear with a sore head – just sort of grumpy
Dead cat bounce
When a share rallies after a large fall, before dropping to new lows – just as a cat that falls from a height bounces on the ground when it lands, even though it is dead
Catching a falling knife
Buying more shares as the prices slump, in the belief that they may soon rebound. Likely to have the same effect on your wallet as actually catching a falling knife will have on your hand
Correction
A misleading term – it sounds minor, but it actually means quite a steep fall in the price of shares
Credit crunch
With all this free publicity it could become the name of a biscuit snack. But it refers to the seizure in the money markets caused by the fallout from US sub-prime mortgage customers defaulting on their loan payments. Big banks refused to lend each other money and while some banks hoarded their cash, others were left exposed without enough cash in their pocket. Think Northern Rock
Going long
Buying shares in the belief that the price will increase, producing a profit. A bit like buying a Hermès handbag in the hope that it will become a classic commanding a much higher price at auction. This doesn’t always work
Growth recession
Not male pattern baldness, but very slow economic growth, which can have a similar effect on consumers as a recession
Hyperinflation
When prices go up faster than people can spend their money. If you leave a wheelbarrow of cash in the street, someone steals only the wheelbarrow
Hedging
Taking two positions that will offset each other if prices change and so limiting financial risk. In roulette, the ultimate hedge bet is putting your money on red and black – but you are bound to lose half your money. Hedge fund managers are cleverer than that
Negative equity
Owing more on your home than it is actually worth. Lots of people who took out mortgages for 100 per cent or more of the value of their properties are in danger of this, especially when house prices fall
Short selling
When traders sell shares they don’t yet own as they believe prices will fall and they can buy them back at a lower price. Like selling your laptop to your mate for £1,000. Before you take it round, it breaks. You buy another in a shop for £800 and give it to your mate, making £200
Stagflation
Not a beast the Royal Family hunts, but a coalescence of stagnation and inflation – a period of slow growth with high inflation
Sub-prime mortgages
Home loans granted to people with troubled credit histories. Those who have missed a few credit card payments are classed as “light” sub-prime, while others who have become bankrupt in the past or who have court judgments against their name for nonpayments of debts are “heavy” sub-prime
Wind up
It means something else to humorists, and Jeremy Beadle. In the money world, it means when a company ceases activity with a view to shutting down. It can also refer to ending a pension scheme, or a relationship. If you want to dump someone, “I’d like to wind things up with you” should do it
http://business.timesonline.co.uk/tol/business/economics/article3234671.ece
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