Dead Money Equals No Returns

Definition of Dead Money


Dead money is a common Wall Street phrase that refers to an investment that has little or no chance of earning a return.  Dead money is most often used to refer to stocks from the Internet bull market that are still worthless some 8 years later.  But, just like everything in the stock market, what one trader considers dead money, could be a future gold mine for another investor.  For example, when gold stocks were considered dead money for a number of years, there were a few traders that could foresee the financial crisis ahead and bought gold stocks when they were dirt cheap.  These stocks that were just referred to as dead money by top analysts, proved to be a great hedge against the failing equities market.

How to Know you are Holding Dead Money


A trader knows they are holding dead money when their holding drops 80% or more in value, then after this drop, there is little or no bounce.  The security will simply sit at these extremely low levels for years.  An example of dead money would be Sirius Satellite Radio, currently trading under 50 cents.  But remember, this dead money could one day make a sharp recovery. 

Dead Money
Tim Ord
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Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...

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