Definitions for Financial Consumers

A few half-truth definitions from the world of finance:

Due Diligence: My boss told me to sell this product.

Proprietary: You’ll never understand it and the fees are much higher to boot.

Volatility: When stocks go down.

Prospectus: A 200-page document written and designed by lawyers to be so boring and detail-oriented that no investor will ever actually read it.

Jim Cramer: The guy on CNBC that everyone uses as an example of why it’s hard to pick individual stocks.

CNBC: The financial news station that most industry people watch, but they all say it’s only with the sound turned off.

Stocks: Help investors build their wealth over the long-term.

Bonds: Help investors preserve their wealth.

Hedge Funds: Help hedge fund managers build and preserve their wealth.

Alpha: Something 100% of active managers assume they can earn but only 3-4% actually do.

Bubble: Something that happens once a week in the markets according to the financial media.

Warren Buffett: Some old guy everyone quotes, but never follows his advice.

Contrarian: Something everyone claims to be, but most are not.

Consensus: Something no one claims to be, but most are.

Market Correction: Something everyone says is going to be healthy before it happens, at which point it morphs into a disaster that will never end.

Unconstrained (Go Anywhere) Funds: How to guarantee mediocre returns in any environment.

Smart Beta: A marketing approach to re-name factor investing strategies that have been around for decades.

Finance Twitter: The place people go for money-losing tweets that get deleted, snark, inspirational quotes from hedge fund managers and dad jokes.

Constructive on the Markets: I have no idea.

Cautiously Optimistic on the Markets: Nope, not a clue.

Consultants: Someone who gets blamed when things go wrong.

Sophisticated Investors: Investors who are willing to pay higher fees for the opportunity to underperform index funds.

Long-Term: The time period that exists when people are making money right up until the point that their investments start to fall and they panic.

Dead Cat Bounce/Junk Rally/Short Covering: Market recoveries you aren’t taking part in.

Further Reading:
Words & Phrases That Should be Banished from Finance