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


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What's been said:

Discussions found on the web
  1. Mark Massey commented on Sep 11

    Love these. And the one about CNBC is true…no one ever has the sound turned on.

  2. Grant commented on Sep 13

    Great! My personal favourite is the sophisticated investors one.