Greenspan put

A ‘put’ is a type of option contract that increases in value as the price of the underlying asset falls. Puts are often used by traders as insurance or to hedge their positions: they may go long on a stock but also take a put option on it to reduce their losses should its price fall. This effectively limits their downside.

In the 1990s, the market came to believe that the US Federal Reserve, then chaired by Alan Greenspan, was effectively providing the same sort of service for the market as a whole by guaranteeing that it would underwrite it at a certain level. Hence the phrase ‘Greenspan put’. This belief was vindicated by the Fed’s prompt action in cutting rates in tricky moments, such as in the wake of the LTCM hedge-fund crisis, and by its willingness to keep rates low throughout the 1990s.

• See Tim Bennett’s video tutorial: What are options and covered warrants?

Paul Hodges: house prices could fall 50% in 'Great Unwinding'

Merryn Somerset Webb interviews Paul Hodges about deflation, the global economy's 'Great Unwinding', and how Britain's house prices could halve.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
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26 January 1808: Australia's Rum Rebellion

On this day in 1808, Major George Johnson carried out the only forceful takeover of power in Australian history during the Rum Rebellion.