Stockmarket Terms: Haircut
A “Hair cut” is?
A “Hair cut” is?- The reduction applied to the value of an asset
- When it’s used as collateral for a loan or margin
In simple terms:
- Asset worth: $100
- Lender values it at: $80
The $20 difference = the haircut
What’s happening?
- Haircuts protect lenders against:
- Price volatility
- Liquidity risk
Counterparty risk
Example:
- You pledge shares as collateral
- Due to risk, the lender discounts their value
You can borrow less than the market value
What’s happening?
- How capital is deployed and who gets to decide
- “Markets aren’t just driven by price.
They’re shaped by strategy, protected by discipline, and tested by intent.”
Stockmarket Terms
Here is a collection of stock market terms, some you may already be familiar with, and others you may not have encountered before. Discover what they mean, explore their origins, and understand how they apply to what is happening in the market today.
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