A:

Dead money is a common term used on Wall Street to describe money that does not earn a return for an investor. It could be money stashed in a mattress, non-interest yielding checking account or a security that does not yield returns. Any money or investment that does not grow or yield gains for the investor is usually referred to as "dead money".

When an investor invests in securities, the expectation is that the security or investment will yield some profitable returns. When an investment is not expected to yield any returns for the investor, the investment is referred to as a 'dead money investment'. Examples of dead money investments are shares or stocks of companies that are not expected to improve or appreciate past their current price. Like everything else, what an investment a trader or investor considers dead money might be considered profitable by another trader or investor depending on whether they want the stock to go up or down.

Finally, when an investment drops more than 80% in value, with no upwards movement for a few years, that stock is classified as "dead money stock".

This question was answered by Chizoba Morah.

RELATED FAQS
  1. What does a Dead Cat Bounce pattern tells traders about a stock?

    Identify the small rally characteristic of a dead cat bounce pattern as a technical trading pattern indicative of a strong, ... Read Answer >>
  2. How can a trader profit from a Dead Cat Bounce pattern?

    Profit from the dead cat bounce chart pattern by using the small, short-lived move upward to initiate a low-risk short position ... Read Answer >>
  3. What is the difference between yield and rate of return?

    Read about the differences between yield and rate of return. See why many novice investors often struggle more with the concept ... Read Answer >>
  4. What is the difference between the yield of stock and the yield of a bond?

    Explore and understand the various meanings of the investment term "yield" as it is applied to equity investments and bond ... Read Answer >>
  5. Are money market accounts for short-term investments a good idea?

    Learn whether money market accounts are good ideas for short-term investments. Money market accounts combine aspects of a ... Read Answer >>
  6. Is a money market account the same as a money market fund?

    Discover the differences between money market accounts and money market funds, including minimum balance requirements, withdrawal ... Read Answer >>
Related Articles
  1. ETFs & Mutual Funds

    The Pros And Cons Of Money Market Funds

    Find out whether stocking your money in these accounts will stand up to the test of time.
  2. Trading

    The Dead Cat Bounce: A Bear In Bull's Clothing?

    Make sure you know the difference between a change in market outlook and short-term recovery.
  3. Managing Wealth

    Get A Short-Term Advantage In The Money Market

    This investment vehicle is often the perfect stop-gap measure for growing your money.
  4. ETFs & Mutual Funds

    Do Money-Market Funds Pay?

    This investment provides security, but its returns may not be adequate for long-term investors.
  5. ETFs & Mutual Funds

    The Pros And Cons Of Money Market Funds

    The pros to investing in the money market include the chance to park money in a safe haven during volatile times.
  6. Investing

    Calculating Capital Gains Yield

    Capital gains yield refers to a security’s appreciation or depreciation during the time it’s held.
  7. Managing Wealth

    4 Types Of Money Market Yields

    We give you four equations to help figure out the yields on your investments.
  8. Managing Wealth

    Yield vs. Total Return: How They Differ

    Understanding yield vs. total return is essential in constructing portfolios that meet income generating needs while providing growth for the future.
  9. Retirement

    Money Market: What Is It?

    The money market is a subsection of the fixed income market. We generally think of the term fixed income as being synonymous to bonds. In reality, a bond is just one type of fixed income security. ...
  10. Trading

    10 Tips To Clear Your Portfolio's Dead Weight

    Clear the dead weight from your office, your portfolio and your mind to make room for profits.
RELATED TERMS
  1. Dead Money

    A slang term for money invested in a security with minor hopes ...
  2. Dead Presidents

    Slang referring to U.S. paper currency. Dead presidents can refer ...
  3. Drop Dead Fee

    Fee paid by a borrower to a lender when an acquisition deal falls ...
  4. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, ...
  5. Drop Dead Date

    A provision in a contract or agreement that stipulates a finite ...
  6. Money Market Yield

    The interest rate earned by investing in securities with high ...
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center