DEAD CAT BOUNCE

[Q] From Steven Gruzd, South Africa: “I had never heard the phrase dead cat bounce before the recent dips and dives on the world’s stock markets, and then heard it three times in one day, on various media reports. Presumably it refers to a small improvement in the market’s fortune, after a long downward movement — even a dead cat dropped from a dizzy height may bounce a little. Am I correct? And what is its origin?”

[A] It does indeed refer to a temporary recovery from a big drop in a stock’s price and the image evoked is just the one you give. The term is part of the extraordinary jargon of the financial world; the evidence strongly suggests that it originated on Wall Street. A good example of the usage is this from 1995: “The nature of that rally is going to be extremely important, because if it’s just a dead cat bounce, then I would say we were in for real trouble”.

Despite its obvious US origins, its first recorded appearance is in a British newspaper, the Financial Times, in December 1985:

Despite the evidence of buying interest yesterday, they said the rise was partly technical and cautioned against concluding that the recent falls in the market were at an end. “This is what we call a ‘dead cat bounce’,” one broker said flatly.

That this wasn’t a one-off is suggested by its turning up again the following year, in an Associated Press newswire piece found by Paul McFedries that makes the origins of the expression clear:

One of the most vivid, if a bit indelicate, word pictures painted by the bears on oil comes from Raymond F. DeVoe Jr. at the investment firm of Legg Mason Wood Walker. DeVoe suggests the printing of a bumper sticker reading: “Beware the Dead Cat Bounce.” “This applies to stocks or commodities that have gone into free-fall descent and then rallied briefly,” he says. “If you threw a dead cat off a 50-story building, it might bounce when it hit the sidewalk. But don’t confuse that bounce with renewed life. It is still a dead cat.”

The phrase gradually caught on during the 1990s but became particularly common — for obvious reasons — after 2000 Its heyday may be passing.

World Wide Words is copyright © Michael Quinion, 1996–2008. All rights reserved. Contact the author if you want to reproduce this piece, but first see our advice page, which also has notes about linking. Your comments and corrections are welcome.