Monday, November 25, 2013

The Stupid Things Financial Professionals Say

Financial media is full of statements that sound informed but really contain very little value. Morgan Housel of Motley Fool recent constructed a list of common quotes that are meant to be enlightened but actually consist of nothing more than simple gibberish, nonsense, and drivel. Below is a sample of the stupid things he hears frequently (along with his thoughts):

“Earnings were positive before one-time charges.”
This is Wall Street’s equivalent of “Other than that Mrs. Lincoln, how was the play?”

“They have no debt except for a mortgage and student loans.”
OK. And I’m a vegan except for bacon-wrapped steak.

“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.

“The [thing not going perfectly] crises.”
Boy who cried wolf, meet analyst who called crises.

“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 exactly one buyer and one seller for every trade.

“We’re cautiously optimistic.”
You’re also an oxymoron.

“We’re trying to maximize returns and minimize risks.”
Unlike everyone else, who are just dying to set their money ablaze.

“We look where others don’t.”
This is said so frequently that it has to be untrue most of the time.

“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 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.

“Tired of throwing money away on rent, he bought a home.”
He knows a mortgage is renting money from a bank, right?

To see Mr. Housel's complete list, click here.

1 comment:

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