Turkey (Disappointing Investment)

The term 'Turkey' in finance refers to a disappointing investment. It may be used in reference to a business deal that went awry, to the purchase of a stock or bond that dropped in value sharply, or to a new securities issue that did not sell well or had to be sold at a loss.
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Definition

Turkey (Disappointing Investment)

In the financial context, a “turkey” is an informal term used to describe a disappointing or unsuccessful investment. This could be due to various reasons such as:

  • A business deal that failed to meet expectations.
  • The purchase of stocks or bonds that have considerably dropped in value.
  • New securities issues that did not attract sufficient buyers or had to be sold at a loss.

Examples

  1. Stock Market Investment: John purchased shares in Company XYZ anticipating a surge in its stock price. However, the company reported poor earnings, leading to a significant drop in its share price. This investment turned out to be a “turkey”.

  2. Business Deal: A start-up company entered into a partnership expecting high returns. Unfortunately, the partner company went bankrupt, rendering the deal a “turkey”.

  3. Bond Purchase: An investor bought corporate bonds that were later downgraded due to the issuer’s deteriorating financial health. The bonds’ market value plummeted, making the bonds a “turkey” investment.

Frequently Asked Questions

Q1: What does it mean if my investment is called a “turkey”?

  • A: It means your investment did not perform as expected and resulted in financial loss or was disappointing.

Q2: Can a “turkey” investment recover?

  • A: It is possible, depending on the nature of the investment and the factors influencing its poor performance. However, in many cases, investors may not fully recover their losses.

Q3: What should I do if I have a “turkey” investment?

  • A: Evaluate whether holding or selling the investment is in your best interest. Consulting with a financial advisor may provide insights based on your overall investment strategy.

Q4: Are “turkey” investments common?

  • A: Yes, all investors occasionally encounter disappointing investments. Diversified portfolios often help mitigate the impact of such investments.

Q5: How can I minimize the risk of ending up with a “turkey” investment?

  • A: Diversifying your portfolio, doing thorough research, and consulting with financial advisors can help reduce the risk.
  • Diversification: The practice of spreading investments across various financial instruments to reduce risk.
  • Bear Market: A market condition wherein the prices of securities are falling, leading to pessimism and potential financial losses.
  • Default Risk: The risk that a bond issuer may be unable to make principal and interest payments.
  • Market Volatility: Refers to the rate at which the price of securities increase or decrease for a given set of returns.

Online Resources

Suggested Books for Further Studies

  1. “The Intelligent Investor” by Benjamin Graham: Provides comprehensive insights into value investing, a strategy that could help avoid “turkey” investments.

  2. “A Random Walk Down Wall Street” by Burton G. Malkiel: Offers principles and strategies to help make smarter investment choices.

  3. “Common Stocks and Uncommon Profits” by Philip Fisher: Focuses on identifying investment opportunities and avoiding bad investments.

Fundamentals of Disappointing Investment: Finance Basics Quiz

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