Widow-and-Orphan Stock

Relatively low-risk stocks from well-known firms that pay high dividends.

Widow-and-Orphan stocks are generally chosen during bear markets and ignored during bull markets. This is because these companies are perceived to be able to maintain their dividend payment schedule through difficult financial times.

Beating The Gun

A slang phrase used when an investor purchases or sells a security at a beneficial price by executing a trade before the market can respond to new information. Beating the gun denotes an investor's ability to time the market and react more quickly than other investors.

Experienced or professional investors try to beat the gun to earn extra return on their investments. Beating the gun requires that an investor act on information before every other investor, which is a difficult accomplishment for casual traders.

Cockroach Theory

A market theory that suggests that when a company reveals bad news to the public, there may be many more related negative events that have yet to be revealed। The term comes from the common belief that seeing one cockroach is usually evidence that there are many more that remain hidden.

For example, in February 2007, subprime lender New Century Financial Corporation faced liquidity concerns as losses arising from bad loans to defaulting subprime borrowers started to emerge। This company was the first of many other subprime lenders that faced financial problems, contributing to the subprime mortgage meltdown

In other words, the fact that one subprime lender (one cockroach) faced financial problems indicated that many other similar businesses were likely to face the same issues