Wallpaper
Candlefocus EditorThe term wallpaper appears to have come from the practice of using degraded and out-of-date stock certificates as actual wall paper. This ritual was common practice during the Great Depression, when outdated and useless stock certificates were applied to walls as a way to add color and warmth to a house. As a result of the Great Depression, stocks and bonds became nearly worthless overnight and provided an economical solution to using regular wallpaper.
Wallpaper stock describes stocks and bonds which have no market value because they do not have an issuer. Stocks and bonds without an issuer can be caused by a company going bankrupt, where the company’s board of directors is no longer functioning, or the company is no longer in operation. This makes these particular stocks and bonds impossible to redeem back to their face value or to generate any type of return.
Wallpaper stock is technically still “owned” by the stock or bondholder, although it will not produce any return or benefit, making it absolutely useless. It describes a stock or bond that has lost its value and is, in a way, a figurative paperweight.
Investors are advised to avoid all securities that may qualify as wallpaper, as trying to use them in any capacity may lead to further losses. While stocks and bonds deemed as wallpaper can still be sold as a collectible item, its value will be nominal. The best course of action for an investor with security that may be considered wallpaper is to contact the securities issuer in order to determine its status. If it is still considered worthless, it is suggested to move the security off your books so there will not be any negative impacts to your investment portfolio.