Investment Terms

A wasting asset is an item that has a limited life span and irreversibly declines in value over time. Examples include depreciating fixed assets such as vehicles and machinery and securities with time decay such as options, which continually lose time value after purchase.
Any asset that decreases in value over time is a wasting asset. For example, a truck used for business purposes will decrease in value over time. Accountants attempt to quantify the decrease by assigning a depreciation schedule to recognize the falling value each year.
While most vehicles and machines are wasting assets, there are a few exceptions. A rare car, for instance, may actually become more valuable over time. The value often declines initially, yet over a long period of time, the car becomes more valuable again if it is well maintained. Generally, though, vehicles are wasting assets with their value gradually declining until they are only worth scrap metal/parts.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

A writer sometimes referred to as a grantor is the seller of an option who opens a position to collect a premium payment from the buyer. Writers can sell call or put options that are covered or uncovered. An uncovered position is also referred to as a naked option. For example, the owner of 100 shares of stock can sell a call option on those shares to collect a premium from the buyer of the option; the position is covered because the writer owns the stock that underlies the option and has agreed to sell those shares at the strike price of the contract.
A covered put option would involve being short of the shares and writing a put on them. If an option is not covered the option writer theoretically faces the risk of very large losses if the underlying moves against them.
Option writers collect a premium in exchange for giving the buyer the right to buy or sell the underlying at an agreed price within an agreed period of time.
A put or call can be covered or uncovered, with uncovered positions carrying much greater risk.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

A Bowie bond was a unique type of asset-backed security which used as collateral for the royalty streams from current (at the time) and future album sales and live performances by musician David Bowie.
Bowie bonds are also sometimes known as Pullman bonds after David Pullman, the banker who created and sold the first Bowie bonds.
Bowie bonds were first issued in 1997 when David Bowie partnered with Prudential Insurance Company and raised $55 million by promising investors income generated by his back catalogue of 25 albums.
Bowie bonds were a type of bond backed by recording artist David Bowie's royalty streams and marked the first such security backed by a performer's cash flow potential.
Bowie used the $55 million raised from the issuance to buy rights to his music from his former manager, which would then, in turn, generate more royalties to bondholders.
The banker credited with making this happen, David Pullman, has since issued similar securities from other performing artists.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

A suicide pill is an aggressive defensive strategy utilized by a target company to prevent attempts at a hostile takeover. The prey, as a last resort, engages in self-destructive measures to put off its suitor, favoring potential bankruptcy over the prospect of a merger occurring.
A suicide pill can also be referred to as the "Jonestown Defense," in reference to the cult that committed mass suicide by poisoning in Guyana in 1978.
The suicide pill defense tactic is considered an extreme version of the poison pill: an anti-takeover strategy that consists of allowing existing shareholders the right to purchase additional shares at a discount to dilute the ownership interest of any new, hostile party.
Suicide pills differ from situation to situation and may result in the breakup or dissolution of the company. Such a defense is most often implemented in circumstances when a competitor attempts a hostile takeover, and the target's management or current ownership, viewing the takeover as a foregone conclusion, would prefer the company cease to exist than see it fall into outside hands.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

A smurf is a colloquial term for a money launderer who seeks to evade scrutiny from government agencies by breaking up large transactions into a set of smaller transactions that are each below the reporting threshold. Smurfing is an illegal activity that can have serious consequences.
Current bank regulations require banks or other financial institutions to report cash transactions exceeding $10,000—or any others they deem suspicious.
Smurfing is a money-laundering technique involving the structuring of large amounts of cash into multiple small transactions.
Smurfs often spread these small transactions over many different accounts, to keep them under regulatory reporting limits and avoid detection.
Smurfing is a form of structuring, in which criminals use small, cumulative transactions to remain below financial reporting requirements.
The Patriot Act gave law enforcement agencies broader powers to curb money laundering by putting in place reporting requirements for any deposits, withdrawals, or currency exchanges exceeding $10,000.
The term smurf appears to be borrowed from illegal drug manufacturers, who use multiple accomplices to evade the legal purchasing limits of drug components.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

A helicopter drop refers to a term first coined by Milton Friedman as a rhetorical device intended to abstract away the effects of any monetary policy transmission mechanisms in a thought experiment regarding the addition of cash to the bank accounts of all citizens—as if dropped from a helicopter overnight.
This term has come to refer to a figurative application of Friedman's metaphor, as a type of monetary stimulus strategy that increases the quantity of the money supply and directly distributes cash to the public in order to spur inflation—or rising prices—and economic growth. Helicopter drop policies have become a common feature of the response from policymakers to large-scale economic shocks since 2000.
A helicopter drop is an expansionary fiscal or monetary policy that is financed by an increase in an economy's money supply. It could be an increase in spending or a tax cut, but it involves printing large sums of money and distributing it to the public in order to stimulate the economy.
The term helicopter drop is largely a metaphor for unconventional measures to jump-start the economy during deflationary periods, which consist of falling prices.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

A zombie bank is an insolvent financial institution that is able to continue operating thanks to explicit or implicit support from the government.
A zombie bank is an insolvent financial institution that is able to continue operating thanks to explicit or implicit support from the government.
Zombie banks are kept afloat to prevent panic from spreading to healthier banks. The term zombie bank was first coined by Edward Kane of Boston College in 1987, in reference to the savings and loan crisis. Restoring zombie banks back to health can cost hundreds of billions of dollars, weigh on economic growth, and prevent investors from pursuing better opportunities elsewhere.
Zombie banks have large amounts of nonperforming assets on their balance sheets and are kept afloat to prevent panic from spreading to healthier banks. Normally, a bank running at a significant loss will eventually be forced into bankruptcy, at which point its assets will be sold off to pay down as many debts as possible. That is unless they are bailed out by governments.
Zombie banks are creatures of financial repression. When loans go bad, the capital flight takes hold and the value of assets plummet, central banks sometimes decide to keep debt-burdened banks, corporations, and households on life support, instead of allowing nature to take its course and creative destruction to do its work.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

Voodoo economics is a derogatory phrase used by George H.W. Bush in reference to President Ronald Reagan's economic policies, which came to be known as "Reaganomics."
Voodoo economics is a derogatory phrase used by George H.W. Bush in reference to President Ronald Reagan's economic policies, known as "Reaganomics."
In 1980, before being appointed as Reagan's vice president, Bush Sr. argued that the president’s supply-side reforms would not be enough to rejuvenate the economy and would greatly increase the national debt.
Bush Sr. was criticized for attacking his then-political rival, although over the years his characterization of Reaganomics as voodoo economics has been validated. Voodoo economics has since become a popular, widely-used phrase to dismiss ambitious economic pledges made by politicians.
Before George H.W. Bush, also known as Bush Sr., became Reagan's vice president, he viewed his eventual running mate's economic policies less than favourably.
Reagan, the 40th U.S. president, took power during a prolonged period of economic stagflation that began under President Gerald Ford in 1976. In response, he called for widespread tax cuts, the deregulation of domestic markets, lower government spending, and a tightening of the money supply to combat inflation.
President Reagan was a proponent of supply-side economics, favouring reduced income and capital gains tax rates. He believed that the savings generated by companies from corporate tax cuts would trickle down to the rest of the economy, spurring growth.
He also assumed that companies would eventually pay more taxes anyway, boosting the government's coffers, as a healthier economy would encourage them to increase volumes.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

UTXO refers to the amount of digital currency someone has left remaining after executing a cryptocurrency transaction such as bitcoin. The letters stand for unspent transaction output. Each bitcoin transaction begins with coins used to balance the ledger.
UTXOs are processed continuously and are responsible for beginning and ending each transaction. Although confirmation of transaction results in the removal of spent coins from the UTXO database, a record of the spent coins still exists on the ledger.
UTXO or unspent transaction outputs are used in cryptocurrency transactions. These are the transactions that are left unspent after someone completes a transaction, similar to the change someone receives after conducting a cash transaction at the store.
A UTXO database is used to store change from cryptocurrency transactions. This database or ledger is initially set to empty or zero. As transactions multiply, the database becomes populated with change records from various transactions.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

Underwriting income is the profit generated by an insurer's underwriting activity over a period of time. Underwriting income is the difference between premiums collected on insurance policies by the insurer and expenses incurred and claims paid out. Huge claims and disproportionate expenses may result in an underwriting loss, rather than income, for the insurer.
The level of underwriting income is an accurate measure of the efficiency of an insurer's underwriting activities.
When an insurance company writes an insurance policy for a new client or renews a policy for an existing client, they receive an insurance premium as payment. This is their revenue. The costs associated with an insurance company are the ordinary business costs as well as money paid out to clients when they file an insurance claim for an accident or other such event.
The difference between revenue and costs, like any business, is the income, in this case, the underwriting income.
An insurer's underwriting income may fluctuate from quarter to quarter, with natural and other disasters such as earthquakes, hurricanes, and fires leading to huge underwriting losses.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.