Halloween is almost here!
My neighborhood is decorated with Spooktacular stuff! Pumpkins are appearing on porches, and kids are trying to decide whether to be a pop princess or a comic book hero.
Wall Street likes to use a few scary terms of its own. So to get into the spirit of the season, I would like to give you definitions of some spine-chilling common terminology.
No it’s not three witches casting a spell. It’s the expiration of three different classes of options or futures. Four times per year we experience quadruple witching, usually coinciding with the end of the calendar quarter.
Voodoo is a religion that is practiced in some Caribbean countries. It conjures up images of black magic and unexplained events. Some companies use highly suspicious accounting methods to hide the real truth. Therefore, the term voodoo accounting.
In the spirit world, phantoms are illusions of things that aren’t real. Phantom stock is a stock that doesn’t exist. Usually this stock is offered as a benefit to key employees and mirrors the actual company stock. It’s a great way to motivate management without giving away stock.
A tombstone is a marker that denotes the end of a person’s life. In the financial world, it marks the beginning of a stock’s life. It’s an advertisement that is written in heavy black ink with a black border. It looks like a tombstone, therefore the name. It’s what the investment bankers use prior to the public offering.
It certainly has a gruesome name! Market Cannibalization refers to a situation where a new product eats the sales of an existing product. It’s more about intruding on the existing products sales rather than adding to the company’s market share.
Ghosting is where two or more market makers collaborate to manipulate stock prices. Sometimes this can be done so secretively that investors never notice it. Just like a ghost.
On Wall Street, this was a pretty scary time. Black Monday occurred October 19, 1987 and the Dow shed a horrifying 508 points in a single session. Truly the stuff nightmares are made of!
So that’s a few bloodcurdling terms used on Wall Street! If your soul is haunted by not receiving my articles, then cast your magic wand (that’s your mouse) here to subscribe for free!
I hope you have a safe and Happy Halloween!