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Stock Talk for Novices

MenInTights

not a plastic bag
IslandGuy said:
I'm doing some interesting reading on getting into the stock market and just thought we could help each other out with some of the phrases used on the stock market, especially for novices like me.

One I found kind of funny was Dead Cat Bounce. Here's what it means:

Dead Cat Bounce is kind of like a rally of a stock on a fast decline, which I gather typically occurs. Some investors see the rally and think the worst of the drop is over, so they buy stock, only to see it eventually hit bottom.

Kind of gruesome, but it comes from what would happen if you dropped a dead cat -- it would bounce up some, but inevitably hit the ground again.

(Hope I got this right ... still a newbie to this stuff)
[SYMBOL]CPN[/SYMBOL] should be a good example of a dead-cat-bounce. NYSE just delisted it because of looming bankrupcy. There's been a 80% drop in stock value over the last month and I am betting today will be the bottom of the dead cat bounce. Looking for a small short lived ralley over the next 2-3 days. Delistings are great because any mutual funds that were hanging on will dump shares today. Its called forced sale, their by-laws state that the stocks they hold must be listed with a major exchange.
 

MenInTights

not a plastic bag
Another thing to look for in a dead catbounce is high volume. In the case of CPN, there are 500M shares. Counting today, CPN has traded more than 500M shares over the last 3 days. Think of the stock like this: everyone who held the stock last week is out and everyone who owns it now has bought it in the last 3 days. The new owners aren't going to sell their shares until they can make a profit or the situation becomes completely hopeless.
 

leopard22

Registered Member
JimColyer said:
My son is studying the stock market in his business classes.
Has he brought home any good tips lately, Jim? What level is he at - high school or college?

I remember in high school we did something like that where we all had X amount of dollars to spend in the stock market over the full school year and we kept track of how our stocks did and then analyzed why the price was going up or down in class. It was very interesting and since it wasn't our money, no harm done, although a few of us would have been in serious financial trouble if the money had been real.

Really brought to mind how careful you have to be in balancing your portfolio if you don't want to lose everything. Of course, if you've got megabucks, you can risk a lot on a new venture and just eat the loss if it happens and go back to your yacht to have a brandy and cry about it :)
 
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