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What Does "Back up the Truck" Mean?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 24 August 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Back up the truck" is a term that is often used in financial and investment circles and has to do with the acquisition of a large percentage of an asset. Typically, this type of activity indicates that the investor has a great deal of confidence in the future performance of that asset, and is willing to commit a sizable amount of his or her resources to the purchase. Brokers will sometimes recommend that investors back up the truck and essentially load up on shares of a given stock because market conditions indicate that the option is about to experience a significant increase in value that will quickly earn a great deal of money.

This colorful expression is based on the concept of a buyer using a truck as the means to pick up useful items in large quantities. When buyers back up the truck, they are in effect purchasing large amounts with the intention of holding onto them for as long as the period of prosperity is likely to continue. During that time, the investors have the benefit of using those assets and generating returns on the holdings.

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While an investor may back up the truck on shares of stock, the approach can also be used with other kinds of investments. For example, an investor may have reason to believe that large tracts of adjoining real estate are likely to become very valuable to select buyers over the next few years. That investor will purchase a considerable amount of real estate at relatively low prices today, then hold the property in anticipation of developers wanting those holdings later on. If the predictions are correct, the investor can then sell the real estate incrementally or all at one time, earning a tremendous profit from the venture.

Before an investor chooses to back up the truck, it is very important to assess the future prospects of the assets in question. This involves assessing what is likely to happen to the value of those assets in the future, identifying when those values will increase and to what level. From there, investors can decide if the projected returns are in line with the risk involved, and if it is possible to hold onto the assets long enough to reap those desirable returns. Should all indications be that the assets in question have excellent potential, the investor may purchase huge quantities, hold them while they pay out the larger dividends, then sell them just before the value begins to level off and eventually drop.

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