What Is 'In the Tank'?
'In the tank' is a slang term referring to prolonged poor performance. In the tank can be used in the context of a specific security as in a company's stock, a particular sector or industry, and even a national economy or the market as a whole. A stock is considered to be in the tank when it has performed very poorly for a period of time.
Note that in politics, 'in the tank' has come to mean in support of, for example in support of a candidate or policy.
- In the tank is used colloquially to refer to an investment that has performed poorly for a while and is unlikely to recover.
- If you're holding an investment that is truly in the tank, the best thing to do is probably to let it go and move on before it bleeds any further.
- An economy that is in prolonged recession may also be said to be in the tank, with dim outlook.
Understanding In the Tank
In the tank can be used to describe a stock that has seen a sharp decline over a short period of time, but this situation is generally seen as tanking - or the start of the slide that sends the stock in the tank. A stock that has seen a poor quarterly performance is described as tanking if the price begins to decline shortly after the news is made public. Earnings misses are a common culprit that sends a stock tanking. An investor might say his investments are in the tank, meaning they are not doing well. Likewise, an investor could refer to her investments as tanking when the positions are deteriorating. Overall market commentary also uses this term, particularly in the media. For example, a pundit might refer to the Eurozone being in the tank.
In the tank suggests that the stock, sector or other grouping being referenced has been performing poorly for a longer period of time. "My portfolio is in the tank," suggests that you've been losing money on your holdings for more than a day, whereas "my portfolio is tanking" may refer to a single trading day. A slightly more crass way to say something is in the tank is to refer to it being in the toilet, with the inference being that the stock, security or market is crap.
What Do You Do When Investments Are in the Tank?
One of the biggest questions individual investors grapple with is what to do when a stock or part of their portfolio is losing money. Having a stock that is in the tank is never pleasant. Should you sell and stop the bleeding? Should you hold on and hope the next piece of market news brings a rally?
Ultimately it is up to the investor, but the most common advice is to only sell stocks that are in the tank if you made an error in your analysis or the valuation is no longer justified by the price due to some rapid erosion in the fundamentals you made your original investment decision upon. It is worth noting that contrarian investors often sift through securities that are in the tank to find their best buys.