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generally in finance "underwater" simply means you've net lost on your investment (it's worth less than you paid for it, or other costs such as funding, legal e
by retube 7y ago
generally in finance "underwater" simply means you've net lost on your investment (it's worth less than you paid for it, or other costs such as funding, legal etc more than offset any returns)
- SilasX 7y agoInteresting. But I checked Investopedia and it only lists the case I gave, plus out-of-the-money options: https://www.investopedia.com/terms/u/underwater.asp https://www.investopedia.com/terms/u/underwater.asp
- Bartweiss 7y agoI've definitely heard the broader use, but I suspect it partly stems from the fuzziness of "owes". If my mortgage exceeds the value of my house, I'm definitely underwater. But if my pension fund owns a ton of CDOs on bad mortgages and can't make payments, it's sorta-kinda underwater too. Broaden things even more, and any institutional investor promising returns can be 'underwater' on a bad investment.
- SilasX 7y agoHm, I could maybe understand if a hedge fund (or other investment firm) were operating on a "high watermark" standard (i.e. they have to get the fund's holdings past their previous all-time-high to get paid at all), then I could accept them being "underwater" in that sense.
- taude 7y agoPeople definitely refer to their options as being underwater. pretty common vernacular, I think.
- SilasX 7y agoSure, I wasn't disputing that usage. I only thought it was wrong when they were using it in the broad sense of "any time your investment is worth less than you paid".