Hot Money
Categories: Trading
There’s always a scene in drug movies where some strung-out dude sets fire to a stack of Benjamins. And...that’s not at all what this term refers to.
Instead, hot money is investor dough that comes and goes…fast. Life in the fa$t lane. As in “I must have shares from this hot IPO at any price” to then 5 minutes later, reading an article in the finest Somalian newspaper, The Civil Rights Abuse Gazette, that claims the IPO is a fraud. And then dumping all of the shares, as in “I must immediately get out of every share of this once-hot IPO now."
That’s hot money. It moves fast, like a finger touching a stove plate...and usually that money does poorly for investors who, um, feel the burn.