Pig: What it Means, How it Works, Example

By
Adam Hayes
Full Bio

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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Updated September 07, 2021
Fact checked by Kirsten Rohrs Schmitt

What Is "Pig" in Investing?

"Pig" is an old slang term for an investor who is seen as greedy, having forgotten their original investment strategy to focus on securing unrealistic future gains. After experiencing a gain, these investors often have very high expectations about the future prospects of the investment and, therefore, do not sell their position to realize the gain.

Key Takeaways

  • "Pig" is slang for an investor who is greedy, having forgotten their original investment strategy to focus on securing unrealistic future gains.
  • A pig is an investor overcome by greed and leads to gluttonous and speculative market behavior that may ultimately result in disaster.
  • While "pig" may be seen as a derogatory term, some may hearken to John Maynard Keynes' notion of "Animal Spirits".

Understanding "Pig"

Like a pig in the farmyard that overindulges in feed, this type of investor will hold on to an investment even after a substantial movement in the hope that the investment will provide even greater gains.

While pig may be seen as a derogatory term, some may hearken to John Maynard Keynes' notion of "Animal Spirits" Animal spirit is a term used by the famous British economist to describe how people arrive at financial decisions, including buying and selling securities, in times of economic stress or uncertainty.

In Keynes’s 1936 publication, The General Theory of Employment, Interest, and Money, he speaks of animal spirits as the human emotions that affect consumer confidence. Today, animal spirits describe the psychological and emotional factors that drive investors to take action when faced with high levels of volatility in the capital markets. The term comes from the Latin spiritus animalis, which means "the breath that awakens the human mind."

One of the emotional charges that Keynes identified was greed (the other primary driver being fear). A pig is an investor overcome by greed and leads to gluttonous and speculative market behavior that may ultimately result in disaster.

Example of a Pig

For example, suppose Joe invests in XYZ Corp. because the stock is undervalued. After the stock doubles its price in two months, Joe holds on to the whole investment, hoping that it will double again in the next two months, instead of selling a portion of the investment to realize a gain. Joe is a piggish investor because his greed for huge gains supersedes his original value investment strategy.

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  1. John Maynard Keynes. "The General Theory of Employment Interest and Money." General Press, 2019.

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