A different kind of knife terminology

 

Don't try to catch a falling knife

Never try to catch a falling knife

Have you ever noticed all the different uses of the word “knife/knives?” Yeah, I know there are some fancy names for all this I learned in English class, but let’s just stick to the main point here.

Actual Headlines-

“City ‘zoo’ teeters on knife edge between calm and chaos”

“Architects say building industry on ‘knife-edge'”

“Why still go under the knife?” 

“Catching the falling knife even at $150 per square foot”

Knives come out as Paul Hogan contests tax probe”

“Restaurants take knife to prices in crisis”

“The Long Knives Come Out As Apple (AAPL) Estimates Cut”

 

A lesson from Wall Street- 

 Now we can add these to our “knife” lexicon.

sell_in_may“Never try to catch a falling knife” (Wall Street proverb)

“Never try to catch a falling knife” (or “Don’t catch a falling knife”) means that when a stock is in free-fall, let it continue to go down and reach bottom. Trying to—often inaccurately—guess the bottom price of the stock is often like trying to catch a falling knife. (It’s bloody.)  

Falling Knife 
A slang phrase for a security or industry in which the current price or value has dropped significantly in a short period of time. A falling knife security can rebound, or it can lose all of its value, such as in the case of company bankruptcy where equity shares become worthless.  As the phrase suggests, buying into a market with a lot of downward momentum can be quite dangerous. 

Source: www.barrypopik.com

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Published in: on December 9, 2008 at 8:34 am  Leave a Comment  
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