Phrases Only Wall Street Understands - Business Insider

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A fund that takes very large bets and collapses, like the energy hedge fund Amaranth did in An investor who has a negative view on a market and is likely to be net short. When a large amount of investors in a fund or ETF redeem all capital from the fund due to poor performance, operational, or managerial issues, causing the fund or ETF to become illiquid and close.

An investor who has a positive view on a market and is likely to be net long.

A manager who decides to close down their fund after a successful run. When a probability distribution graph shows values that are far away from the mean, giving the curve a bulge on one of the ends.

This indicates an increased riskiness in the investment.

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The common name given to the VIX index, which measures the fear investors see in the market, in the form of expected volatility. The higher the VIX the higher the investor fear on Wall Street is.

When investors flee risky investments such as equities for less risky assets such as cash and treasuries during times of economic crisis or uncertainty. This flight to quality causes yields on these less risky assets to approach zero, as there becomes more demand then supply. It also causes a huge amount of volatility in the risky securities as investors scramble to put in redemption orders and other investors attempt to squeeze them out. An investor who either changes from a neutral or bearish stance on a market to a bullish one.

An investor who either changes from a neutral or bullish stance on a market to a bearish one. Hedge fund manager or employee at a hedge fund. A manager that adds on a significant amount of leverage in order to increase returns.

This is often done when a manager forsees a large directional shift in a market that they can capitalize on.

Levering up a portfolio often leads to blowups if there is a movement in the other direction or the manager is not sufficiently hedged or well capitalized. Managers that collect large sums of money, but offer only Beta, or index like returns to their investors. An investor who has a long term or perpetual negative view on the market. Examples of perma-bears are Peter Schiff, Marc Faber, and Nouriel Roubini. An investor who has a long term or perpetual positive view on the market. Buy and hold investors and academics can be seen as perma-bulls because they believe that over time markets operate on an efficient frontier.

An investor who believes they cannot outperform the performance of the market because there is no way to predict the future performance. When the price of a security rises rapidly it "squeezes" those investors who are short the security because they are forced to liquidate their positions at a very unfavorable price.

The demand is greater than the supply, which drives the price of the security even higher, creating a huge profit for long investors. This kind of situation is seen very often in commodities like gold and oil, which can become very volatile.

Short for volatility, refers to the risk of a security or a portfolio. Quick Links API Careers Innovation Press Rewards Security Small Biz Legal Disclaimer Privacy Policy Terms of Use Rewards Terms SEC ADV. Get In Touch Broadway Suite New York, NY ext. Get Started in Under 1 Minute Today.