Never forget these two axioms:
Money frees us, but its pursuit may enslave us.
It’s not how much you have at the end; it’s how much you could have made.
INVESTING SLANG, PART 1
Let’s take a little break from hard core financial literacy and investing and talk about some of the lingo you’ll hear used on financial shows or blogs/books or even worse movies.
Amaranthed: A fund that takes large positions in companies that turn out to be wrong and then goes bankrupt much like Amaranth, a hedge fund focused on energy, in 2006
“I lost everything because my dumbass fund collapsed. I got Amaranthed.”
Bear: An investor who has a pessimistic view of how the market will do OR a market with negative returns currently
“Don’t listen to him. He’s a bear even in good times.”
“This bear market has pushed back my retirement at least two years.”
Blowup: When a critical mass of investors in fund all sell is a short time usually due to poor performance (but possibly other issues) resulting in the fund’s closure
“Great, Just great. My Latin American fund sucked so bad that it had a blowup leaving me with nothing. And Venezuelans thought they had it bad.”
Bull: An investor who has an optimistic view of how the market will do OR a market with positive returns currently
“This is such a bull market that even grandmas are becoming millionaires.”
Dead Cat Bounce: The temporary increase in a stock’s price after a huge drop before it starts falling again which may be mistaken for a stock that is now through its temporary troubles and is ready to climb up seeming like it’s a value when it’s actually a trap. Even a dead cat bounces up off the sidewalk.
“Don’t touch that stock. It was a falling knife and just entered its dead cat bounce phase. Don’t be fooled.”
Falling Knife: A security (usually a stock) experiencing a sharp downturn which may be mistaken for a good value on a company or fund
“Don’t dare put money in that thing. It’d be like catching a falling knife.”
Go long: An investor or fund that goes from a neutral or bearish outlook to a bullish one
“Wow! Did you see those new job numbers? I’m going long!”
Go short: An investor or fund that goes from a neutral or bullish outlook to a bearish one
“Ugh. Did you see those new job numbers? I’m going short!”
Hedge fund: An investment fund composed of capital from accredited (ie, high net worth) investors or institutional investors (ie, college endowments, retirement or pension funds, even cities if you can believe that) run by firms that use debt or leverage as a way to invest in any type of security, but usually are high risk/high reward and charge fees along with a percentage of profits that they generate for their investors (at least in their best years when they actually generate profits)
“I’m putting my money in a hedge fund because I’m probably too rich anyway and could use the tax write off when I inevitably lose all my money in this thinly veiled Ponzi scheme.”
Hedgie: Anyone working for or running a hedge fund
Hedgistan: The I-95 corridor between Manhattan and Westport, CT including the epicenter of the hedge fund world, Greenwich, CT
“Beware as we drive through Hedgistan. Guard your wallets.”
Paying for Beta: Fees to a fund that only gives investors returns that any index fund does at a much lower fee rate
“I love paying for beta because in addition to my stupidity in all money matters, I’m also a masochist.”
Perma-bear: an investor who has a persistently or even permanent negative outlook on the market
“He’s such perma-bear they call him Dr. Doom.”
(Probably not what you were expecting if you’re a Marvel comic books fan.)
Perma-bull: an investor who has a persistently or even permanent positive outlook on the market
“Look at that guy, The market is getting crushed like a car at the junkyard and he is still a perma-bull. Makes no damn sense.”
Random walkers: Investors who do not believe that they cannot outperform the market in any sustained period of time due to the inability of anyone reliably predicting the future performance of the market
There’s tons more where this came from and more will be posted both next week and again in the future for sure.
I’d love to hear from any and all of you about your thoughts, so we can all learn from one another.
Please spread the word about this blog to your friends (real and virtual), family, and colleagues. Talk to you soon.
Until next time…