The Amateur Financier

Well, I’m in a bit of a humorous mood today, so we’re going to do something a little different.  There are any number of weird and wacky words  and phrases that are used by investors to help describe the investment world.  You don’t normally think of investment bankers, accountants and others as the wild and crazy types, but they apparently have a pretty decent sense of humor when it comes to creating names to associated with the financial world.  Let’s take a look at some of them (courtesy of Investopedia)

Ankle Biter – A small cap stock, that is one with a market capitalization of less than $500 million.  The titans of Wall Street must have pretty high ankles if a company worth $500 dollars gets the same moniker as a 2-year-old toddler.

Black Knight – A company attempting a hostile takeover of another company.  A nicely descriptive phrase regarding how a targeted company will likely view the potential acquirer, conjuring up some potent imagery of invading hordes and kidnapping.  (Also, one of the nicknames that my Sondra uses for me.)

CNN Effect – The slowing of consumer spending during times of gripping news.  During a war or terrorist attack, people tend to be glued to the tube, trying to get all the latest news, before going back to their normal schedules..  I suppose nowadays it could be called the Fox News Effect or MSNBC effect, depending on your political leanings.

David Hasselhoff Index – A stock index of companies associated with David Hasselhoff, under the assumption that companies linked to him are more likely to be profitable. (Really?  Alright, we’ll run with it.)  Other related celebrity indexes include the Eva Longoria Index, the Lindsay Lohan Index, and the Paris Hilton Index.  (Again, I have to ask, really?)  All are based on the idea that companies linked to particular celebrities dervie some sort of unquantifiable benefit from the association.

Eat Your Own Dog Food - To use the products that your company produces.  If you’re a software company, for example, it means that your employees use your software in the course of their work.  It’s a good way to show confidence in your own products, but I have to ask: what do professional investors eat that ‘dog food’ is the food product that they chose for this expression?

Fool In the Shower – A central bank that doesn’t wait long enough for a stimulus action to work, increases the stimulus, and eventually ends up overshooting its goal.  Used by Milton Friedman, who used the allusion of a fool in a cold shower, who cranks the heat all the way up and ends up being scalded.  A good reminder that major policy changes take time to move through the economy.

Hot Waitress Economic Index – The theory that the more attractive waitresses there are, the worse the job market is doing (since attractive people have little trouble finding other work in good economic times.  So, if your waitress (or waiter; unlike Wall Street, I try not to discriminate) looks like a supermodel the next time you go out to eat, the downturn in jobs isn’t over yet.

Mad Hatter - A corporate executive who is considered incapable of leading the company.  One good warning is if he starts yelling out ‘Change Places’ at various points during a board meeting.

Samurai Market - Slang term for the Japanese Stock market; included here because I’ve been spending way too much time on the Financial Samurai’s website of late (and because, as my carnival on Monday should have indicated, I’m a bit of a Japan-ophile).  Similar to terms like ‘Yankee Market’ for the American stock market and ‘Bulldog Market’ for the British stock market.

There Ain’t No Such Thing As A Free Lunch (TANSTAAFL) – A reminder that there is a cost to every decision we make, in terms of time, energy, or money.  Also, a reminder that nobody, with possible exception of your mother, will ever give you something with nothing expected in return.  (Also known as There Is No Such Thing As A Free Lunch (TINSTAAFL) for those who don’t like to use the word ain’t or have double negative in their phrases.  In either case, even the acronym is a mouthful.)

A Ton of Money – A lot of money; apparently, if you actually had enough one dollar bills to weigh one ton, it would add up to $908,000.  Personally, I would prefer a ton of twenties or hundreds, but even a ton of singles is a pretty hefty wad of money.

That’s all the definitions I have time to share; there’s plenty more to consider (and chuckle at) on Investopedia’s financial buzzwords list.

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