What Is a Falling Knife?

A falling knife is a term used to describe the situation when an asset or stock price has been rapidly declining. It implies that if you try to catch it, you will get cut. This phrase is often used in financial markets as a warning against trying to buy stocks at their lowest point, since they could continue dropping and cause further losses.

The idea behind this metaphor is that attempting to purchase assets during periods of rapid decline can be dangerous because there’s no way of knowing how low the price may go before it starts rising again. As such, investors should exercise caution when considering buying into any market where prices are quickly decreasing and wait for signs of stabilization before making any decisions about investing in those assets.

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