What is 'Near Term'

Near term is a period of time referring to a short time into the future. The term is used to describe events that may occur soon. In finance, the term is often used to explain the timeframe during which an event or change is expected to occur. It can mean different timeframes based on the industry, security being traded or business.

BREAKING DOWN 'Near Term'

Financial market analysts may use the near term in reference to events including profits, the issuance of bonds, expectations for the next quarter, etc.

For example, Company ABC is likely to export very little gasoline in the near term due to a 20 percent loss of refining capacity following the emergency shutdown. Also, an analyst may indicate that stock XYZ has a bright near-term outlook, meaning the company is expected to do well in the next few months.

Those investors making investments in near-term securities may be trading options with a looming expiration date or in a one-month government bond. Or they may be looking at near-term chart trends when day trading a stock.

Near Term in Economics

In economics, a reference to near term may refer to a level of growth in a common indicator such as gross domestic product (GDP), inflation, consumer spending or the cost of labor.

As an example, the Federal Reserve may be planning to monitor the near-term level of weekly jobless claims to gauge whether or not to change interest rate policy at an upcoming meeting. Or Congress may be waiting to receive the near-term trade deficit numbers before deciding whether to pass economic legislation aimed at closing the gap by lowering taxes on exports.

Near Term in Business

When discussing business, near term may refer to an active or soon-to-be active period of time that an event may take place. A company may have a revised near-term debt rating due to a recent deterioration of a company's financials, whether from a lawsuit, public relations disaster or sudden change in industry regulations.

Near-term sales are often pegged to a series of short timeframes. Often broken down into quarters, an "athleisure retailer," for example, may be expecting a blowout sales number due to a heavily-marketed endorsement from an influential celebrity or professional athlete.

RELATED TERMS
  1. Short Term

    Short term means holding an asset for a short period of time ...
  2. Reference Base Period

    A reference base period is the year in which the consumer price ...
  3. Long Term

    Long term refers to the extended period of time that an asset is ...
  4. Event Study

    An event study is an empirical analysis done on a security that ...
  5. Term Bond

    Term bonds mature on a specific date in the future and the bond ...
  6. Annual

    The term "annual" refers to an event that occurs once a year.
Related Articles
  1. Trading

    How Far Will Apple's Stock Run?

    A look at Apple's recent run-up and near-term technical resistance levels to watch.
  2. Trading

    Credit Default Swaps: An Introduction

    Credit default swaps are the most widely used type of credit derivative and a powerful force in the world markets.
  3. Trading

    Forex Trading The U.S. Trade Balance Figures

    Those that are able to capitalize on this rather obscure report will benefit immensely from it.
  4. Trading

    The Fundamentals Of Forex Fundamentals

    There are many economic indicators that can be used to evaluate forex fundamentals. These indicators can be an invaluable resource for any currency trader.
  5. Insights

    The Balance Of Trade

    The balance of trade is the difference between a country’s imports and exports. A trade deficit occurs when a country buys or imports more goods from other countries than it sells or exports. ...
  6. Trading

    Writing A Covered Call

    Writing an option is the process of selling to another investor the right, but not the obligation, to buy or sell a stock at a given price in the near future. It can also be referred to as shorting ...
  7. Investing

    Economic Indicators You Should Know for Investment

    Economic indicators are some of the most valuable tools investors can place in their arsenals. Understand these investing tools for better market returns.
  8. Trading

    Short interest: What it tells us

    Whether you agree with the overall sentiment or not, short interest is a data point worth adding to you overall analysis of a stock.
  9. Insurance

    Term Life Insurance: Everything You Need to Know

    Term life insurance is an affordable way to financially protect your loved ones after your death. Here's what you need to know before purchasing a policy.
Trading Center