Posted in Finance, Accounting and Economics Terms, Total Reads: 354
Definition: Plum (Investment)
An extremely good selection of investment, or one that has performed extraordinarily well in comparison to other comparable investments. While there are no concrete mathematical criteria to explain a plum, it should have performed really well over a long period of time without being thought of as being risky.
An asset class may turn out to be a plum investment in one particular period but a lemon (the opposite of a plum) in another. For example, large-cap technology shares were plum investments in the period of mid to late 1990s, but converted into lemons in the first decade of the new millennium, a period when US Treasury bonds were performing as the plums.
Normally, shares that have recorded sustainable returns for many years would be called as plum investments. An optimally diversified portfolio of blue-chips would most often consist of a number of plums, but may also consist of a few lemons - shares that perform poorly continuously with low or negative rates of return.