What is 'Dead Money'

Dead money is a slang term for money invested in a security with minor hopes of appreciation or earning a return. The stock may also be referred as dead money by analysts, as a warning to investors who might purchase the shares.


Funds not earning interest or income is known as dead money. It could be money stashed in a mattress, non-interest yielding checking account or a security that does not yield returns.

Some investors will hold a stock despite recent price drops, hoping that it will turn around and earn back some of the lost value. However, if the investment is dead money, the likelihood of a turnaround is low, and investors should consider selling the shares before incurring additional losses.

When an investor invests in securities, they expect that security or investment to yield some profitable returns – unless they don't. If they don't, then 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. Many money managers believe their number one priority is to avoid putting their clients into dead money investments. They consider money to be a tool that has to work for an investor single day. 

Identifying Dead Money Investments

Just like everything in the stock market, what one trader considers dead money, could be a future gold mine for another investor.  For example, gold stocks were considered dead money for many years by a good number of market analysts. However, there were a few traders that could foresee the financial crisis ahead and bought gold stocks when they were dirt cheap. These stocks, which were classified as dead money by many top analysts, proved to be a great hedge against the failing equities market.

Many traders apply the term "dead money" only if a given position drops over 80 percent in value, then after this drop, there is little or no bounce.  The security will simply sit at these extremely low levels for years.  One past example of dead money was Sirius Satellite Radio, which traded around 50 cents for years. However, this "dead money" did eventually make a sharp recovery. As of May, 2018, the stock was trading between $6 and $7 per share.

  1. Dead Hand Provision

    A dead hand provision is a special type of poison pill, in which ...
  2. Broad Money

    Broad money is an economics term that represents the calculation ...
  3. Money Order

    A money order is a certificate, usually issued by governments ...
  4. Easy Money

    Easy money is when the Federal Reserve allows cash flow to build ...
  5. Money Flow

    Money flow is calculated by averaging the high, low and closing ...
  6. Money Manager

    A money manager is a person or financial firm that manages the ...
Related Articles
  1. Insights

    What's a Dead Cat Bounce? InvestoTrivia

    Quiz: What does the financial phrase "Dead Cat Bounce" mean?
  2. Insights

    What is Money?

    Money: It's a part of everyone's life, and we all want it, but what is it, how does it gain value, and how it was created?
  3. Tech

    Why Bitcoin May See A 30% Dead Cat Bounce

    Bitcoin's price has recovered somewhat from a shocking recent nosedive, but the rebound may be temporary. Here's why.
  4. Financial Advisor

    Impact of SEC's New Money Market Fund Rules

    A look at how new rules introduced by the SEC will impact money market funds.
  5. Insurance

    Ways Money Can Buy A Little Happiness

    Money can't buy happiness for everyone, but it may be able to buy you time, security and experiences.
  6. Investing

    Is Optimism for Weatherford Warranted? (WFT, EOG)

    Weatherford tumbled hard in late October, and has tried to recover since, only to fail. Can investors find a bargain with this stock selling for under $5?
  7. Investing

    Why Money Market Funds Are Wooing Investors

    The rates on money market funds are higher than they've been in years. However, new regulations could bring some additional risks.
  8. Financial Advisor

    3 Reasons You're Crazy for Not Investing in Stocks

    It's been more than five years since The Great Recession officially ended. It's time to invest in the stock market again.
  1. What is the difference between fiat money and representative money?

    Fiat money is physical money (paper money and coins), while representative money is something that represents the intent ... Read Answer >>
  2. What are some examples of money market funds?

    Learn more about different types of money market mutual funds, including those that invest in government paper versus commercial ... Read Answer >>
  3. How do investors lose money when the stock market crashes?

    Find out how investors can lose money due to stock market crashes. Learn how fluctuating share prices affect overall wealth. Read Answer >>
  4. How do I calculate a bond's modified duration using Excel?

    Understand the benefits of investing in a money market mutual fund, and learn why investors use this type of account in volatile ... Read Answer >>
Trading Center