Investing term
What is Catalyst?
The event or condition that will close the valuation gap — and an estimated timeline.
A catalyst is the specific event or condition expected to close the gap between a stock's price and its value — and roughly when. Cheapness alone isn't a reason to expect a stock to rise; something has to change minds. Naming the catalyst forces you to articulate why the market will eventually agree with you, instead of just hoping it does.
For example
"A new product launch next year should lift earnings 30%" is a catalyst — a concrete reason the market might re-rate the stock upward.
Catalyst is taught hands-on in Stage 13 — Active Investing: Should You Even Bother?.
See the lesson →