Barefoot Pilgrim

  

When an unsavvy investor blows her money in equities trading.

It's a term referring to people who invests carelessly or takes greater risks than necessary to achieve their desired return.

So...when Debbie hears that inflation will eat away the value of her dollar over time, she decides she wants to invest her money to earn just enough to protect against inflation. Not knowing what she's doing, she throws a bunch of cash into emerging markets and takes a bath on her investment. She's taking a single, untested step into a new world...kinda like a barefoot pilgrim.

Related or Semi-related Video

Finance: What is a Penny Stock?0 Views

00:00

Finance a la shmoop what is a penny stock? well in England did it be a

00:08

farthing stock in Japan yen stock in Somalia put up your hands and give me

00:14

your stock stock all right well what do they all have in common except maybe the

00:18

Somalian one well their stocks that trade for an extremely low value or [Penny stocks definition appear]

00:24

amount of money per share and not necessarily just a penny could be a dime

00:29

or 27 pennies but very small amounts and most will define a penny stock as

00:35

anything trading under $1 a share why well because then it's value can be [Pennies falling]

00:39

described in terms of pennies and because it's living in the delisting red

00:44

zone where most exchanges will simply stop trading in the stock unless the

00:49

company does a meaningful reverse split ie where they go from 200 million shares

00:54

trading at a buck each to having say 50 million shares out there trading at 4

00:58

bucks each right the total value the company didn't

01:01

change just the number of shares went down by 4x and the value went up by 4x

01:05

right well one big element of penny stocks is the cost of trading them and [Man discussing penny stocks]

01:10

you see this issue brilliantly illustrated by Leo in the wolf of Wall

01:15

Street... but if you're paying 4 cents a share Commission

01:19

to buy a share of IBM which trades for like a 150 bucks in change of

01:23

share and those four cents are a rounding error but if you're a retail

01:27

customer paying five cents a share Commission for a 30 cent stock well your

01:31

commission is enormous like some 20 ish percent of the total value spend five

01:37

grand buying grappling hooks.com and a thousand bucks of that dough goes into

01:42

the pocket of Leo or some other bucket shop player selling you those shares

01:46

while penny stocks may seem cheap just because they're cheap per share and if

01:51

you believe this kind of math we have this really amazing bridge we'd love to

01:54

sell you right here...[Bridge explodes and tumbles]

Up Next

Finance: What is the Greater Fool Theory?
11 Views

The Greater Fool Theory posits that there is always a greater fool out there to buy an item at a higher price... until there isn't.

Finance: What are Phishing Scams?
8 Views

A phishing scam is a con in which someone is contacted online in an attempt to procure money or personal information. We'd never do that. In fact,...

Finance: What is Laissez Faire?
9 Views

Laissez faire is a French term meaning "let it be." In other words, the economy is smarter than we are, and can determine what's fair.

Finance: What is Painting The Tape?
26 Views

Painting the tape is an illegal way to manipulate stock prices. And yes, it’s still illegal, even if you paint it super pretty.

Find other enlightening terms in Shmoop Finance Genius Bar(f)