Fulcrum Point
Categories: Metrics, Financial Theory
As you probably learned in fourth grade science, a fulcrum represents the point where a lever pivots. Like on a teeter-totter. You sit on one end of a board and a friend sits on the other. In the middle, the board rests on a base: the fulcrum.
Now imagine that the teeter-totter is the fate of a stock. Or of oil prices. Or of the economy as a whole. It can go up or down based on that fulcrum. In finance terms, a fulcrum point represents the event that dramatically influences the fortunes of the price of an asset, or the direction of a general economy.
The fulcrum point could represent all kinds of events. Think things like the launch of a new product, or conflict in the Middle East, or a bubble in the subprime housing market.