In financial slang, a bagholder is a shareholder left holding shares of worthless stocks. 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 lot 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
A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It i ...
. The word is derived by combining
shareholder
A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal own ...
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
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional companies. ...
and
Worldcom
MCI, Inc. (subsequently Worldcom and MCI WorldCom) was a telecommunications company. For a time, it was the second largest long-distance telephone company in the United States, after AT&T. Worldcom grew largely by acquiring other telecommunic ...
, or the victims of a
pump and dump
Pump and dump (P&D) is a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operat ...
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 stock
Penny stocks are common shares of small public companies that trade for less than one dollar per share.
The U.S. Securities and Exchange Commission (SEC) uses the term "Penny stock" to refer to a security, a financial instrument which represents a ...
s.
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.
Etymology
The expression "left holding the bag" originated in eighteenth century Britain and spread throughout the English-speaking world.
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
A fool's errand prank is a type of practical joke where a newcomer to a group, typically in a workplace context, is given an impossible or nonsensical task by older or more experienced members of the group. More generally, a fool's errand is a t ...
known as a
snipe hunt
A snipe hunt is a type of practical joke or fool's errand, in existence in North America as early as the 1840s, in which an unsuspecting newcomer is duped into trying to catch a nonexistent animal called a ''snipe''. Although snipe are an actual ...
,
a
practical joke
A practical joke, or prank, is a mischievous trick played on someone, generally causing the victim to experience embarrassment, perplexity, confusion, or discomfort.Marsh, Moira. 2015. ''Practically Joking''. Logan: Utah State University Press. ...
in which an unsuspecting newcomer is led outdoors and left "holding the bag" in which to catch a creature that does not exist.
As an American
rite of passage
A rite of passage is a ceremony or ritual of the passage which occurs when an individual leaves one group to enter another. It involves a significant change of status in society. In cultural anthropology the term is the Anglicisation of ''rite ...
, it is often associated with
summer camp
A summer camp or sleepaway camp is a supervised program for children conducted during the summer months in some countries. Children and adolescents who attend summer camp are known as ''campers''. Summer school is usually a part of the academ ...
s and groups such as the
Boy Scouts
Boy Scouts may refer to:
* Boy Scout, a participant in the Boy Scout Movement.
* Scouting, also known as the Boy Scout Movement.
* An organisation in the Scouting Movement, although many of these organizations also have female members. There are ...
.
See also
*
Fall guy
Fall guy is a colloquial phrase that refers to a person to whom blame is deliberately and falsely attributed in order to deflect blame from another party.
Origin
The origin of the term "fall guy" is unknown and contentious. Many sources place ...
*
Greater fool theory
In finance, the greater fool theory suggests that one can sometimes make money through the purchase of overvalued items with a purchase price drastically exceeding the intrinsic valueif those assets can later be resold at an even higher price.
I ...
*
Hot potato (game)
Hot potato is a party game that involves players gathering in a circle and tossing a small object such as a beanbag or even a real potato to each other while music plays. The player who is holding the object when the music stops is eliminated.
O ...
*
Pyramid scheme
A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly im ...
References
{{Reflist
External links
Holding the Bagon Bartleby
HESG X-CEO/ Tom Gaffney replied "We Are All The Bagholders" - Health Sciences Group Inc. Stock market