Wednesday, January 25, 2012

Bellwether

Definition of 'Bellwether'

An event or indicator that shows the possible presence of a trend. The performance of certain companies/stocks and bonds are considered by analysts to indicate the condition of the economy and financial markets because their performance is well-correlated with a trend. Bellwether companies are usually the market leaders in their respective sectors.

Investopedia explains 'Bellwether'

A bellwether stock is a stock that is used to gauge the performance of the market in general. For many years General Motors was an example of a bellwether stock, hence the saying, "What's good for GM is good for America." Similarly, a rapid decrease in available steel may indicate economic recovery, since steel is used in manufacturing and building.

The word is a combination of "bell" and "wether". Shepherds would often hang bells around the necks of the sheep that led the flock in order to determine where they were in the fields.

Thanks to Investopedia / Investopedia ULC
http://www.investopedia.com/terms/b/bellwether.asp?partner=TOD01#axzz1kTVmfDoN

 
 

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