Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Yo-Yo

What it is:

Yo-yo is slang describing volatility in the market.

How it works (Example):

In a mathematical sense, standard deviation is a measure of how much an investment's returns can vary from its average return. That is, it is a measure of how much the market for a stock is yo-yo-ing. The less a market or investment yo-yos, the less risk there is that its value will deviate from the expected value.

Why it Matters:

Yo-yos famously go up and down, though their owners usually think that is fun. In the trading world, yo-yo markets are rarely fun -- they create a lot of stress for investors, who worry their investments are going to lose value suddenly.

However, yo-yo markets also present tremendous opportunity, because what goes down often comes back up, just like a yo-yo (unless, of course, the string comes off or gets tangled, which euphemistically can happen in the trading world, too).