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 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.
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
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, it is often associated with
summer camps 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 t ...
.
See also
*
Fall guy
*
Greater fool theory
*
Hot potato (game)
*
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