Bagholder Explained

In financial slang, a bagholder is a shareholder left holding shares of worthless stocks.[1] The bagholder typically bought in near the peak, when people were hyping the asset and the price was high, and held it all the way through steep declines, losing a large amount of money in the process.

It can also refer to the holder of other assets and financial instruments that become worthless, such as the junior bonds of a defaulted company or the coins of a failed cryptocurrency. The word is derived by combining shareholder with the expression "left holding the bag."

Examples

The shareholders could be caught up in a corporate bankruptcy and accounting scandal, as was the case with Enron and Worldcom, or be the victims of a pump and dump scheme, in which investors fall victim to e-mail spam, rigged stock tip forums, or other tricks used by stock touts to drive up the shares of worthless penny stocks.

If a worthless property is bought with the idea to sell it for a higher price, the gullible person who is stuck owning the property is said to be the bagholder.[2]

Etymology

The expression "left holding the bag" originated in eighteenth century Britain and spread throughout the English-speaking world.[3] In this context, a person left holding the bag is stuck with the stolen goods, taking the blame from the police while the rest of a criminal gang escapes.

The phrase is also used in association with the fool's errand known as a snipe hunt,[4] a practical joke in which an unsuspecting newcomer is led outdoors and left "holding the bag" in which to catch a creature that does not exist.[5] [6] As an American rite of passage or haze, it is often associated with summer camps and groups such as the Boy Scouts.[7]

External links

Notes and References

  1. Booth . Richard A. . Stockholders, Stakeholders, and Bagholders (or How Investor Diversification Affects Fiduciary Duty) . The Business Lawyer . 53 . 2 . 1998 . 429–478 . 40687791 . 149731 .
  2. Web site: Bag Holder - What Does It Mean?.
  3. Web site: Q&A Left Holding the Bag. World Wide Words. 2002-11-30. 2006-12-03. https://web.archive.org/web/20070103051159/http://www.worldwidewords.org/qa/qa-lef1.htm. 3 January 2007 . live.
  4. Book: Partridge. Eric. A Dictionary of Slang and Unconventional English. 2006. Routledge. 9781134963652. 560. en.
  5. Book: Brunvand. Jan Harold. Jan Harold Brunvand. American Folklore: An Encyclopedia. 1996. Taylor & Francis.. New York. 0-815-30751-9. 233, 1233.
  6. Book: Palmatier, Robert Allen . Speaking of Animals: A Dictionary of Animal Metaphors . 1995 . Greenwood Publishing . Westport, Connecticut . 357 . 0313294909 .
  7. Book: Fee. Christopher R.. Christopher R. Fee. Webb. Jeffrey B.. American myths, legends, and tall tales : an encyclopedia of American folklore. 2016. ABC-CLIO. Santa Barbara. 9781610695671. 514.