TeachMeFinance.com - explain pool
pool -- a large group of mortgages that back a mortgage security.
Pool -- This term applies when interests join together for
The anthracite cpal pool, as it formerly existed, was an
agreement whereby each company belonging to the pool was
to mine a certain percentage of the total production. The
production for each month was determined in the preceding
month. The purpose of the pool was regulation of both output
and prices. By restricting the output to the consumptive
demand control of prices was accomplished. A schedule of
prices was prepared for each month and all the companies
made sales of coal in accordance with it. The anthracite coal
pool was declared illegal by the courts on the ground that it
was in restraint of trade. In manufacturing pools are often formed. Formerly the
manufacturers of steel rails joined in a pool. The pool fixed
prices and each concern was allowed to make and sell a certain
percentage of the total output of rails. Pools, for the most part, have been terminated by the Interstate
commerce law and by the national anti-trust law
and the anti-trust laws of the various states.
Also, the term pool is applied to a fund contributed by several
persons for the purpose of undertaking a speculation.
When a pool is formed in a stock in order to manipulate the
stock the contributors to the pool (mutual fund) appoint a
manager of it who conducts the operations in the stock. If it
is a bull pool the first step is to buy as much stock as is desired
at as low prices as possible and then by means of wash transactions
(see Washing) in the stock advance the price to a
point where the stock actually held can be sold at a satisfactory profit. If it is a bear pool the first step is to sell short (sell
stock not owned) to the extent desired at as high prices as
possible and then by means of wash transactions in the stock
depress the price to a point where the stock actually sold short
can be bought back at a satisfactory profit.
Stock holdings are sometimes pooled (or put in a pool) to
obtain control or tie up control of a company.
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Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".
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