Bagholder

In U.S. financial slang, a bagholder is a shareholder left holding shares of worthless stocks.[1]

The shareholders could be caught up in a corporate bankruptcy and accounting scandal, as was the case with Enron and Worldcom, or the victims of a pump and dump scheme, in which naive and unsophisticated investors fall victim to e-mail spam, rigged stock tip forums, or other tricks used by stock touts to drive up the shares of worthless penny stocks.

The term has also been applied as a term of derision to real estate investors.[2]

The word is derived by combining shareholder with the expression "left holding the bag."

Real estate investment

If property is bought with the idea to sell it for a higher price, the person who is stuck owning the property is the bagholder.[3]

Holding the bag

The expression "left holding the bag" originated in eighteenth century Britain and spread throughout the English-speaking world.[4] In this context, a person left holding the bag is stuck with the stolen goods, taking the blame from the police while the rest of a criminal gang escapes.

See also

References

  1. ↑ Booth, Richard A. (1998). "Stockholders, Stakeholders, and Bagholders (or How Investor Diversification Affects Fiduciary Duty)". The Business Lawyer 53 (2): 429–478. JSTOR 40687791. SSRN 149731.
  2. ↑ "Still More Housing Bull," by Seth Jayson, The Motley Fool, Aug. 8, 2007
  3. ↑ "Bag Holder - What Does It Mean?".
  4. ↑ "Q&A Left Holding the Bag". World Wide Words. 2002-11-30. Archived from the original on 3 January 2007. Retrieved 2006-12-03.

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