Here are a few thoughts I've had recently about the financial terminology most often found in fund manager/stock picker interviews. Hardly anybody ever wants to make a call that stands out and would rather seek solace within the herd. CYA, it's everywhere, and I can't stand it. That's one thing I like about a guy like Carl Swenlin. He just comes out last week and says we're in a bull market, completely off the cusp. Where have you heard that comment prior? I haven't heard it from anyone before Carl said it.
I no longer watch CNBC, but I'm very sure this type of language is still abused daily. Here are a few examples and my comments underneath.
- "The market is up XX% since XXX. It's come too far too fast, we need a pullback."
---6 figures a year in fees he collects and that's the best he can come up with.
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-A comment made to a floor trader.
"Sir, where are we heading tomorrow?
"Well, you have to look at what's going on here. The market is manipulated on low volume. Many managers are on vacation right now so once labor day hits, volume will take us back to where we should be."
---Are you sure you're not on vacation?
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"We're looking for the smart money to start coming in to the market to give us direction going forward"
---Translation: We haven't got a clue what to do next. If we're waiting for smart money, what is your firm considered?
-----------
"Insiders are selling in the droves!!"
----Translation: Help me please by selling. Help. I'm heavily short or cash, bring the market back down, we're not doing so good this year!
-----------
"We see resistance at XXX for gold and once it breaks that level on volume, we see around XXXX of upside"
---You work for a major brokerage firm and that's the best you can come up with? I learned that in TA 101.
-----------
"We don't believe this market go any further and we advise caution. However, a break of XXX would be largely bearish and a break of XXX would be bullish so we are monitoring those levels closely. "
---So.... what are we doing here? Current allocation please?
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"When we look at the chart of 19XX, we can see we rallied and then crashed again."
---Ok, great, what can you compare that chart of 19XX to? Surely if history repeats, then that 19XX chart must have repeated something. Unless this is history in the making.
----------
"We recommend that investors keep a defensive posture with a good amount in cash and defensive sectors. We recommend an invested allocation of 60 stocks 40 bonds"
---Translation: We haven't got a clue, but we read in a book once that 60/40 is a good mix. If we're wrong, we'll just blame the book because it was written by a Nobel Laureate.
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"Hedge Fund XXX buys 1 Million shares of XXX in the first quarter!"
---He bought them while you were a seller and he's selling them back to you when you become a buyer.
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"There's no way the market will survive September. Historically it's the worst month and it's always been that way in 40 years of my experience."
---Did you sell in May and walk away this year?
----------
"The American Consumer is now being more frugal and cautious in these harsh economic times"
---Ha, so if you're underwater in credit card, housing and car debt while unemployed, I guess going to Dunkin Doughnuts instead of Starbucks to save .41 cents on that Latte is a good place to start.
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"We don't see the point in adding capital at this level. We've been out of this rally since mid-March, but we called the bottom and locked in those gains"
---Translation: If this market goes any higher, we're going to have to buy higher. We're way behind our benchmark now. Maybe people will sell it off a bit today to give us an entry day on weakness.
And there we have it. A few reasons why watching Financial News or reading the headlines misleads millions of investors every year. These are just a few examples I've thought of off the top of my head. Maybe some of you have examples you've heard recently.
Oh, and it looks like The Dance is still going.
I no longer watch CNBC, but I'm very sure this type of language is still abused daily. Here are a few examples and my comments underneath.
- "The market is up XX% since XXX. It's come too far too fast, we need a pullback."
---6 figures a year in fees he collects and that's the best he can come up with.
------------
-A comment made to a floor trader.
"Sir, where are we heading tomorrow?
"Well, you have to look at what's going on here. The market is manipulated on low volume. Many managers are on vacation right now so once labor day hits, volume will take us back to where we should be."
---Are you sure you're not on vacation?
-----------
"We're looking for the smart money to start coming in to the market to give us direction going forward"
---Translation: We haven't got a clue what to do next. If we're waiting for smart money, what is your firm considered?
-----------
"Insiders are selling in the droves!!"
----Translation: Help me please by selling. Help. I'm heavily short or cash, bring the market back down, we're not doing so good this year!
-----------
"We see resistance at XXX for gold and once it breaks that level on volume, we see around XXXX of upside"
---You work for a major brokerage firm and that's the best you can come up with? I learned that in TA 101.
-----------
"We don't believe this market go any further and we advise caution. However, a break of XXX would be largely bearish and a break of XXX would be bullish so we are monitoring those levels closely. "
---So.... what are we doing here? Current allocation please?
----------
"When we look at the chart of 19XX, we can see we rallied and then crashed again."
---Ok, great, what can you compare that chart of 19XX to? Surely if history repeats, then that 19XX chart must have repeated something. Unless this is history in the making.
----------
"We recommend that investors keep a defensive posture with a good amount in cash and defensive sectors. We recommend an invested allocation of 60 stocks 40 bonds"
---Translation: We haven't got a clue, but we read in a book once that 60/40 is a good mix. If we're wrong, we'll just blame the book because it was written by a Nobel Laureate.
----------
"Hedge Fund XXX buys 1 Million shares of XXX in the first quarter!"
---He bought them while you were a seller and he's selling them back to you when you become a buyer.
----------
"There's no way the market will survive September. Historically it's the worst month and it's always been that way in 40 years of my experience."
---Did you sell in May and walk away this year?
----------
"The American Consumer is now being more frugal and cautious in these harsh economic times"
---Ha, so if you're underwater in credit card, housing and car debt while unemployed, I guess going to Dunkin Doughnuts instead of Starbucks to save .41 cents on that Latte is a good place to start.
----------
"We don't see the point in adding capital at this level. We've been out of this rally since mid-March, but we called the bottom and locked in those gains"
---Translation: If this market goes any higher, we're going to have to buy higher. We're way behind our benchmark now. Maybe people will sell it off a bit today to give us an entry day on weakness.
And there we have it. A few reasons why watching Financial News or reading the headlines misleads millions of investors every year. These are just a few examples I've thought of off the top of my head. Maybe some of you have examples you've heard recently.
Oh, and it looks like The Dance is still going.
