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Buzzword: Big bath

Marketplace Staff Oct 5, 2007
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Buzzword: Big bath

Marketplace Staff Oct 5, 2007
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Splishing and splashing bring us this week’s Marketplace Money buzzword: Big bath.

Big bath is Wall Street’s way of avoiding negative expectations by heaping on piles of bad news. Usually, after a bad quarter, a company might report a decline in income that’s worse than it really is. Since most investors are primed for it, they assume the worst must be over.

This week, Bank of America and Citibank reported massive losses related to this summer’s market mayhem, causing stocks to actually go up. But before anyone gets too happy, remember this: Hot water gets rid of dirt, but it can also burn.

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