If you follow stock-market punditry obsessively like we do, you'll quickly notice something.
A handful of analysts speak English. But the vast majority don't.
Rather, they speak a language unique to the investment business.
This language consists of market phrases that sound intelligent but don't mean anything.
The phrases don't sound like they don't mean anything, of course. On the contrary, they sound like they mean a lot. In fact, they make the speaker sound as wise as Warren Buffett (who, to his great credit, never speaks this way).
Most of these phrases have another key benefit, which is useful in the investment business: They never commit the speaker to any specific recommendation or prediction. In other words, no matter what happens, the analyst can always be "right" and never be "wrong" — because they didn't actually say anything.
So if you want to sound smart about investing without really saying anything, read on.
"The easy money has been made."
When to use it: Any time a market or stock has already gone up a lot.
Why it's smart-sounding: It implies wise, prudent caution. It implies that you bought or recommended the stock a long time ago, before the easy money was made (and are therefore smart). It suggests that there might be further upside, but that there might be future downside, because the stock is "due for a correction" (another smart-sounding meaningless phrase that you can use all the time). It does not commit you to any specific recommendation or prediction. It protects you from all possible outcomes: If the stock drops, you can say, "As I said ... " If the stock goes up, you can say "As I said ... "
Why it's meaningless: It's a statement about the obvious. It's a description of what has happened, not what will happen. It requires no special insight or power of analysis. It tells you nothing that you don't already know. Also, it's not true: The money that has been made was likely in no way "easy." Buying stocks that are rising steadily is a lot "easier" than buying stocks that the market has left for dead (because everyone thinks you're stupid to buy stocks that no one else wants to buy.)
"I'm cautiously optimistic."
A classic. Can be used in almost all circumstances and market conditions.
When to use it: Pretty much anytime.
Why it's smart-sounding: It implies wise, prudent caution, but also a sunny outlook, which most people like. (Nobody likes a bear, especially in a bull market.) It sounds more reasonable than saying, for example, "The stock is a screaming buy and will go straight up from here." It protects the speaker against all possible outcomes. If the market drops, the speaker can say, "As you know, I was cautious ... " If the market goes up, the speaker can say, "As you know, I was optimistic ... "
Why it's meaningless: It's too general to mean anything. It can accurately describe any market outcome in history, merely by adjusting the unspecified time frame. (If you were "cautiously optimistic" in 1929, you were "cautious," which was good, and you were also optimistic, which was also good. Eventually, the market recovered!)
"It's a stockpicker's market."
Another classic. Sounds smart but is completely meaningless.
When to use it: Especially useful in bear markets or flat markets, but can be used anytime.
Why it's smart-sounding: It suggests that the current market environment is different from other market environments and therefore requires special skill to navigate. It implies that the speaker has this skill. It suggests that, if you're talented enough to be a "stockpicker," you can coin money right now — while everyone else drifts sideways or loses their shirts.
Why it's meaningless: If you pick stocks for a living (or for your personal account), all markets are "stockpickers' markets." In all markets, traders are trying to buy winners and sell dogs, and in all markets only half of these traders succeed. (It's a different half each time, of course — and most of the "winnings" of the winners are wiped out by transaction costs and taxes, but that's a different story). It is no easier (or harder) to win the stockpicking game in a flat or bear market than in a bull market, and if you try, you'll almost certainly do worse than if you had just bought an index fund.
See the rest of the story at Business Insider
