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 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, it is often associated with summer camps and groups such as the Boy Scouts.[7]

See also

References

  1. ↑ Booth, Richard A. (1998). "Stockholders, Stakeholders, and Bagholders (or How Investor Diversification Affects Fiduciary Duty)". The Business Lawyer. 53 (2): 429–478. JSTOR 40687791. SSRN 149731.
  2. ↑ "Bag Holder - What Does It Mean?".
  3. ↑ "Q&A Left Holding the Bag". World Wide Words. 2002-11-30. Archived from the original on 3 January 2007. Retrieved 2006-12-03.
  4. ↑ Partridge, Eric (2006). A Dictionary of Slang and Unconventional English. Routledge. p. 560. ISBN 9781134963652.
  5. ↑ Brunvand, Jan Harold (1996). American Folklore: An Encyclopedia. New York: Taylor & Francis. pp. 233, 1233. ISBN 0-815-30751-9.
  6. ↑ Palmatier, Robert Allen (1995). Speaking of Animals: A Dictionary of Animal Metaphors. Westport, Connecticut: Greenwood Publishing. p. 357. ISBN 0313294909.
  7. ↑ Fee, Christopher R.; Webb, Jeffrey B., eds. (2016). American myths, legends, and tall tales : an encyclopedia of American folklore. Santa Barbara: ABC-CLIO. p. 514. ISBN 9781610695671.
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