Investments glossary

Falling Knife

A falling knife is a colloquial term for a rapid drop in the price or value of a security. The term is commonly used in phrases like, don’t try to catch a falling knife, which can be translated to mean, wait for the price to bottom out before buying it. A falling knife can quickly rebound – in what’s known as a whipsaw—or the security may lose all of its value, as in the case of a bankruptcy.

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