Imagine traders walking hand-in-hand with buy-and-hold investors, analysts snuggling with economists, bulls and bears living in perfect harmony. Suddenly, the world is a beautiful place to live. February is the time for love. So, in keeping with the romance in the air, let's look at some love-related terms that would warm even the coldest Wall Street heart.

Sweetheart Deal
This term might make you think of two corporations at a diner table, sipping the same milkshake through separate straws while holding hands. Not quite. But the sweetheart deal may be the Wall Street equivalent. In a sweetheart deal, one company offers very attractive terms and conditions to another company or individual. It can be an acquisition or an attempt to lure in a new CEO.

A sweetheart deal can be a bad thing for shareholders because, if their company is being taken over, management may receive benefits (for example, buyout packages) while shareholders take a loss. If a sweetheart deal is obviously unethical and not in the interests of shareholders, legal action can be taken. (To read more about mergers and acquisitions, see The Wacky World of M&As and The Basics Of Mergers And Acquisitions.)

Risk Lover
If you spent your formative years as your neighborhood's daredevil, you may be a risk lover. Risk lovers in the investment world don't necessarily try to jump the school bus during recess, but they do make investments with uncertain outcomes. This type of investor doesn't love risk just for its own sake, but because the risk/return tradeoff dictates that with a greater exposure to risk comes a greater possibility of payout. This means that the return is huge when it happens, but that the chance that it will happen may be slimmer. The risk lover's opposite is the investor who is risk averse - he or she prefers investments with a more guaranteed payout, even if it's smaller. (Love the risk? Then check out Risk And Diversification and Determining Risk And The Risk Pyramid.)

Sensitivity Analysis
No, we're not talking about whether you write poetry and bring your sweetheart flowers and chocolates "just because". Sensitivity analysis is a technique used to determine how a projected outcome is affected if one of the key predictions proves false. For example, you might try to determine how sensitive a movie's box office profits are to lower-than-expected numbers during its opening weekend.

Friendly Hands
In the investing world, companies view friendly hands in a favorable light. This term refers to investors who buy a stock at the IPO and hold onto it for the long term, looking for long-term rewards rather than a short-term gain. Friendly hands help the company create a sense of stability right off the bat. Angel investors usually double as friendly hands. (Find out more about IPOs in The Murky Waters Of The IPO Market and IPO Basics Tutorial.)

Love Money
Love money is the money that startup businesses get from angel investors, usually friends and family. They may give money as a result of the strength of their love for the business owner, rather than the strength of his or her business plan. This type of money is hard to come by and can be very fickle in its affections. A business that gets it should be glad.

Teddy Bear Hug
A teddy bear hug can occur when a takeover company warns its target company in advance about the offer it's about to make on its shares. If the price per share is extremely generous, and if the target company accepts, the deal is referred to as a bear hug. The target company, however, may turn down the offer in the hope of a higher price. If the acquiring company is a teddy bear, it will usually give in and raise the value of the offer. The idea is that the acquiring firm is soft like a teddy bear and wants to make everyone happy.

Happy Valentines Day!
There is plenty of love on Wall Street, even if it's just in the romance language that's lavished on many of the complex relationships and business deals that happen there. Whether it's a sweetheart deal, love money or a teddy bear hug, these terms suggest that there's a softer side to Wall Street's cut-throat, competitive - even if only on the surface.

Related Articles
  1. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  2. Markets

    The Biggest Private Equity Firms In India

    Learn about the leading private equity firms operating in India and which companies and industries are attracting foreign investment dollars.
  3. Financial Advisors

    Are Alternatives Right for Your Portfolio?

    Alternative investments are increasingly making their way into retail investors' portfolios. Are they a good fit?
  4. Fundamental Analysis

    Top Private Equity Bargains for Your Portfolio

    Investing in private equity firms can lead to long-term profits.
  5. Stock Analysis

    GoPro's Stock: Can it Fall Much Further? (GPRO)

    As a company that primarily sells discretionary products, GoPro and its potential falls right in line with consumer trends. Is that good or bad?
  6. Stock Analysis IPO: Is it a 'Buy' or Should You Pass?

    Demand for relationships is always high. Now you will have a way to directly invest in the relationship market. But is it priced fairly?
  7. Stock Analysis

    Toys 'R' Us Stock Doesn’t Exist: Here is Why

    Learn why investors cannot trade stock in toy retailer Toys 'R' Us. This privately traded company could be a hot IPO candidate for the future.
  8. Entrepreneurship

    How To Raise Seed Capital and Grow Your Startup

    To get a business off the ground, entrepreneurs need a clear understanding of how to strategically position themselves for VC firms and angel investors.
  9. Stock Analysis

    If You Had Invested in Qualcomm Right After Its IPO

    Find out about how much you would have if you had bought 100 shares of Qualcomm during its initial public offering and the amount you would receive in dividends.
  10. Markets

    10 Most Famous Leveraged Buyouts

    Learn about the boldest, riskiest leveraged buyouts in history and how they either become famous for failing miserably or making billions.
  1. When did Facebook go public?

    Facebook, Inc. (NASDAQ: FB) went public with its initial public offering (IPO) on May 18, 2012. With a peak market capitalization ... Read Full Answer >>
  2. Do hedge funds invest in private companies?

    Hedge funds normally do not invest in private companies because of liquidity concerns. Capital funding for private companies ... Read Full Answer >>
  3. Who do hedge funds lend money to?

    Many traditional lenders and banks are failing to provide loans. In their absence, hedge funds have begun to fill the gap. ... Read Full Answer >>
  4. Can mutual funds invest in private equity?

    Mutual funds can invest in private equity indirectly by buying shares of publicly listed private equity companies, such as ... Read Full Answer >>
  5. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  6. How long does it take to execute an M&A deal?

    Even the simplest merger and acquisition (M&A) deals are challenging. It takes a lot for two previously independent enterprises ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center