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. Bear Market

    A market condition in which the prices of securities are falling, ...
  4. Flight To Quality

    The action of investors moving their capital away from riskier ...
  5. Falling Knife

    A slang phrase for a security or industry in which the current ...
  6. Panic Selling

    Wide-scale selling of an investment, causing a sharp decline ...
RELATED FAQS
  1. How should fixed-income investors prepare for a bear market?

    Fixed-income investors should prepare for a bear market by reducing exposure to instruments that are riskier and increasing ... Read Full Answer >>
  2. What techniques are most useful for hedging exposure to the drugs sector?

    Useful techniques for hedging exposure to the drugs sector include investing in stable, non-cyclical sectors that do not ... Read Full Answer >>
  3. What options strategies are best suited for investing in the automotive sector?

    The automotive sector is more volatile than the broader market. The sector is prone to big movements in both directions. ... Read Full Answer >>
  4. When during the economic cycle should I invest in the banking sector?

    The banking sector is known as a non-cyclical sector. While it trends in the same direction as the broader market, its volatility ... Read Full Answer >>
  5. Do options make more sense during bull or bear markets?

    Options and various option strategies can be used in bull and bear markets. Certain option strategies can be used to profit ... Read Full Answer >>
  6. How can I protect my investment portfolio from recessions?

    One of the biggest fears among investors is what happens to their portfolios during a recession. After all, economic contraction ... Read Full Answer >>
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. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  2. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  3. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  4. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  5. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  6. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
Trading Center