Investment professionals like to think they are smart. In truth most are, but just not as much as they think. The industry is filled with over-achievers that default to investment banking because they lack a personal project to direct all their wit and ambition.
Anyhow, very smart people are very much capable of saying very dumb things. Here is a list of some of the most stupid finance sayings you often hear:
“Earnings missed estimates.”
No. Earnings don’t miss estimates; estimates miss earnings. No one ever says “the weather missed estimates.” They blame the weatherman for getting it wrong. Finance is the only industry where people blame their poor forecasting skills on reality.
“Earnings met expectations, but analysts were looking for a beat.”
If you’re expecting earnings to beat expectations, you don’t know what the word “expectations” means.
“Earnings were positive before one-time charges.”
This is Wall Street’s equivalent of, “Other than that Mrs. Lincoln, how was the play?”
“It’s a Ponzi scheme.”
The number of things called Ponzi schemes that are actually Ponzi schemes rounds to zero. It’s become a synonym for “thing I disagree with.”
“The [thing not going perfectly] crisis.”
Boy who cried wolf, meet analyst who called crisis.
“He predicted the market crash in 2008.”
He also predicted a crash in 2006, 2004, 2003, 2001, 1998, 1997, 1995, 1992, 1989, 1984, 1971…
“More buyers than sellers.”
This is the equivalent of saying someone has more mothers than fathers. There’s one buyer and one seller for every trade. Every single one.
“Stocks suffer their biggest drop since September.”
You know September was only six weeks ago, right?
“We’re cautiously optimistic.”
You’re also an oxymoron.
[Guy on TV]: “It’s time to [buy/sell] stocks.”
Who is this advice for? A 20-year-old with 60 years of investing in front of him, or a 82-year-old widow who needs money for a nursing home? Doesn’t that make a difference?
“They don’t have any debt except for a mortgage and student loans.”
OK. And I’m vegan except for bacon-wrapped steak.
“We’re neutral on this stock.”
Stop it. You don’t deserve a paycheck for that.
“There’s minimal downside on this stock.”
Some lessons have to be learned the hard way.
“Shares fell after the company lowered guidance.”
Guys, they just proved their guidance can be wrong. Why are you taking this new one seriously?
“Our bullish case is conservative.”
Then it’s not a bullish case. It’s a conservative case. Those words mean opposite things.
“We look where others don’t.”
This is said by so many investors that it has to be untrue most of the time.
“Is [X] the next black swan?”
Nassim Taleb’s blood pressure rises every time someone says this. You can’t predict black swans. That’s what makes them dangerous.
“We’re waiting for more certainty.”
Good call. Like in 1929, 1999 and 2007, when everyone knew exactly what the future looked like. Can’t wait!
“The Dow is down 50 points as investors react to news of [X].”
Stop it, you’re just making stuff up. “Stocks are down and no one knows why” is the only honest headline in this category.
“Investment guru [insert name] says stocks are [insert forecast].”
Go to Morningstar.com. Look up that guru’s track record against their benchmark. More often than not, their career performance lags an index fund. Stop calling them gurus.
“We’re constructive on the market.”
I have no idea what that means. I don’t think you do, either.
“This is a cyclical bull market in a secular bear.”
“Investors are fleeing the market.”
Every stock is owned by someone all the time.
“We expect more volatility.”
There has never been a time when this was not the case. Let me guess, you also expect more winters?
“This is a strong buy.”
What do I do with this? Click the mouse harder when placing the order in my brokerage account?
“We’re trying to maximize returns and minimize risks.”
Unlike everyone else, who are just dying to set their money ablaze.