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. Where do penny stocks trade?

    Generally, penny stocks are traded through the use of the Over the Counter Bulletin Board (OTCBB) and through pink sheets. ... Read Full Answer >>
  2. Where can I buy penny stocks?

    Some penny stocks, those using the definition of trading for less than $5 per share, are traded on regular exchanges such ... Read Full Answer >>
  3. How does the stock market react to changes in the Federal Funds Rate?

    The stock market reacts to changes in the federal funds rate in various ways depending on where it is in the business cycle. ... Read Full Answer >>
  4. How do I place an order to buy or sell shares?

    It is easy to get started buying and selling stocks, especially with the advancements in online trading since the turn of ... Read Full Answer >>
  5. Is there a difference between financial spread betting and arbitrage? (AAPL, NFLX)

    Financial spread betting is a type of speculation that involves a highly leveraged derivative product, whereas arbitrage ... Read Full Answer >>
  6. What are the requirements for being a Public Limited Company?

    The requirements for an entity to be considered a public limited company (PLC) include registration requirements, establishing ... Read Full Answer >>
Related Articles
  1. Options & Futures

    What Does Quadruple Witching Mean?

    In a financial context, quadruple witching refers to the day on which contracts for stock index futures, index options, and single stock futures expire.
  2. Professionals

    Is A Stockbroker Career For You?

    Becoming a stockbroker requires a broad skill set and the willingness to put in long hours. But the rewards can be enormous.
  3. Investing Basics

    How to Pick A Stock

    The first step in picking stock is to determine your goals.
  4. Investing Basics

    5 Tips On When To Buy Your Stock

    Buying stocks that make you money can be a satisfying experience for a variety of reasons, not the least of which is the impact it has on your bottom line.
  5. Investing

    Where to Ride Out the Volatility

    The one word that characterizes financial markets today: volatile. Take a look at these three considerations.
  6. Stock Analysis

    The Top 5 Micro Cap Telecommunication Stocks for 2016 (CLFD,LMOS)

    Identify and learn about five of the best micro-cap telecommunications stocks to consider for your diversified portfolio for 2016 and beyond.
  7. Investing News

    Can Oil Sink More? Experts Give Mixed Opinions

    Plummeting oil prices are the gift that keeps on giving. Not. BlackRock's Larry Fink is among those who say we haven't hit rock bottom.
  8. Investing

    Why You Should Keep Your Equity Sails Flying

    Why leave money in equities and risk another year of lost opportunity, when fixed income securities seem to be on the road to higher returns?
  9. Investing

    You May Want to Open Your Mind to Closed-End Funds

    Even after a year with major stock market indexes simply tread water, there is one underutilized corner that may be worth a peek: closed-end funds.
  10. Mutual Funds & ETFs

    These ETFs Are Best Bets for Market Volatility

    The market is crashing, but that presents opportunities. Here are some exchange-traded funds that may present some upside in this tumultuous time.
RELATED TERMS
  1. Value Investing

    The strategy of selecting stocks that trade for less than their ...
  2. Sector

    1. An area of the economy in which businesses share the same ...
  3. Swap

    A derivative contract through which two parties exchange financial ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The ...
  5. Issued Shares

    The number of authorized shares that is sold to and held by the ...
  6. Depository Trust Company - DTC

    One of the world's largest securities depositories, it holds ...
Hot Definitions
  1. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  2. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  3. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  4. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  5. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  6. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
Trading Center