falling knife
n. A stock whose price is currently undergoing a steep or long-standing decline.

Example Citation:
"Let's look at Oak Brook-based McDonald's Corp. (MCD). The stock closed Friday at $ 33.38 a share, up $ 1.38 on the week, but far off its 52-week peak at $ 49.56, touched last November. A falling knife."
—Mitchell Zacks, "When a stock's price falls, those selling may be right," Chicago Sun-Times, August 6, 2000

Notes:
The term "falling knife" comes from an old Wall Street adage: "Never try to catch a falling knife." It means that it's both dangerous and foolhardy to buy a stock that's falling because chances are it's falling for a reason and will likely continue to do so. This maxim has now become so ingrained (it goes back in print to at least 1986), that we're starting to see references to just "falling knife," without the rest of the saying.

Related Words:

Category: