Investing is a process that's full of highs and lows -- sometimes the lows are pretty low, but the highs can also be pretty high, like in the case of a day bagger. Find out more about this investing term and what it means to score a day bagger below.
What is a day bagger?
A day bagger is a stock that rises as much per share as you've invested in it in a single day. So, if you've invested $5 per share on average, and your stock rises $5 per share in one day, you've got a day bagger.
"Day bagger" is a term invented by the Rule Breakers community at The Motley Fool in 2007 as a variation on the "-bagger" terminology already in use. For example, a stock that doubles in value is a "two-bagger," or one that triples is a "three-bagger.' Since day baggers are stocks that gain their original cost basis in a single day, "day bagger" feels right.
Example of a day bagger
Let's say you've purchased stocks in the new biotech startup XYZ Labs. XYZ's share price is $5 per share when you invest, and you've made all your investments at once. So, the original price per share that you're working with is $5.
You've held XYZ for a little while, and their product is about to hit the market when other investors suddenly discover that XYZ Labs is a pretty cool stock to own. They rush to buy shares for long-term investing and drive the stock price up $6 that day. Since your original cost per share is $5, and the value of XYZ Labs has just gone up $6 in one day, XYZ Labs is a day bagger for you that day.
If those new investors came in at, say, $15 per share, the stock will become a day bagger for them on the day it increases $15 in a single day, calculated using the closing price for that day.
Day bagger vs. spiffy pop: what's the difference?
If you've been around The Motley Fool for long, you probably have heard another term that sounds a lot like this: Spiffy popping. The difference between a spiffy pop and a day bagger comes down to usage. Spiffy pop is a verb, as in "XYZ Labs spiffy popped!" and day bagger is a noun, "XYZ Labs was a day bagger for me today."
In reality, you should use both terms together, although not interchangeably, since they are different parts of speech. Just like you'd say a spring sprung, you'd say a day bagger spiffy popped. (I hope that clears things up.)
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Why day baggers matter to investors
Day baggers are huge deals to investors, especially those who are still relatively new to investing. They're giant wins worthy of celebration, and they keep investors interested in the longer-term goals they're setting for themselves.
But it's more than that, of course.
A day bagger also means you're probably on the right track. As more of your stocks earn themselves at least one day as a day bagger and don't slide back too significantly, you can feel more confident in your stock-picking methods. You're on the right track to a far better retirement than you might have had by simply playing it safe and investing in exchange-traded funds or other pre-built portfolios.
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