Bloodletting

AAA

DEFINITION of 'Bloodletting'

A period marked by severe investing losses. Bloodletting may occur during a bear market, in which the value of securities in many sectors may decline rapidly and heavily.


It is named after an ancient medical practice in which doctors would use leaches or cuts to drain some of a patient's blood (one of the four humors). The premise being that it was "healthy" to balance the humors if feeling ill.

INVESTOPEDIA EXPLAINS 'Bloodletting'

Investors facing a bear market have the option of riding out the downturn and holding onto their investments, or selling their investments in order to mitigate losses. A sell off of a particular security may result in a further decline in its value, as there are more sellers than buyers available in the market. An investor who thinks that the market will improve, may take advantage of this situation by buying up bargain stocks.

RELATED TERMS
  1. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, ...
  2. Correction

    A reverse movement, usually negative, of at least 10% in a stock, ...
  3. Capitulation

    When investors give up any previous gains in stock price by selling ...
  4. Falling Knife

    A slang phrase for a security or industry in which the current ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier ...
  6. Bear Market

    A market condition in which the prices of securities are falling, ...
Related Articles
  1. Active Trading Fundamentals

    An Introduction To Behavioral Finance

    Curious about how emotions and biases affect the market? Find some useful insight here.
  2. Options & Futures

    Bloodletting And Knights: Medieval Investment Terms

    From bloodletting to ye olde black knights, things on Wall Street are getting downright medieval!
  3. Active Trading Fundamentals

    Recession: What Does It Mean To Investors?

    Understanding the business cycle and your own investment style can help you cope with an economic decline.
  4. Active Trading

    Market Cycles: The Key To Maximum Returns

    You need to understand the various phases of the market cycle to avoid bubbles and make the best investments.
  5. Active Trading Fundamentals

    Limiting Losses

    It is impossible to avoid them completely, but there is a systematic method you can use to control them.
  6. Budgeting

    The Greatest Market Crashes

    From a tulip craze to a dotcom bubble, read the cautionary tales of the stock market's greatest disasters.
  7. Trading Strategies

    Rules and Strategies For Profitable Short Selling

    Short sales work well in bull and bear markets but strict entry and risk management rules are required to overcome the threat of short squeezes.
  8. Economics

    Worried About The Fed Hike?

    With the Nasdaq crossing the threshold and the broader equity bull market entering its 7th year, many investors are anxious that stocks are in a bubble.
  9. Stock Analysis

    5 Reasons Sirius XM Haters Are Gone

    Bears continue to clear out of Sirius XM Holdings. There were fewer than 146 million of its shares sold short by the end of February.
  10. Technical Indicators

    This Indicator Should Always Be Part Of Your Strategy

    The relationship between price, 200-day EMA and its slope of generate useful patterns that assist in price prediction and trade management.

You May Also Like

Hot Definitions
  1. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  3. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  4. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  5. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  6. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
Trading Center