When watching, reading, or listening to financial media, there is a plethora of confusing words out there. Often times the jargon used only results in confusion while marginalizing the reader or client to a point where they feel uncomfortable asking questions, out of the fear of looking unintelligent. We are going to look at some of the terms we hate hearing. With Peter Hodson appearing on BNN Market Call on January 15^th at 1PM, tune in to see if you can catch him saying any of these terms, and let us know some of your most hated financial terms in the comments.

Liquidity is not a problem until it’s not there – This one always leaves us scratching our head. Obviously problem X is not a problem until it surfaces. This is why it is important to manage position sizes and be cognizant of liquidity over longer timeframes, not just over a recent month or two. This is usually also referencing liquidity drying up during black swan types of events, but due to the nature of these events, planning for or trying to defend against them is a moot point as they by definition are unpredictable. 

Market perform – This term largely tells us nothing and is a great hedge for those that use it. If the market goes up, great! We told you it would follow the market (as the majority of stocks do). If the market goes down, that is too bad but we warned you it would perform similar to the market. On average, the majority of stocks will be ‘market performers’ to some degree so this is essentially saying that there is no real opinion on the name in question, positive or negative. A much more constructive comment would be something like: ‘We think it will perform very similar to the market and would in turn prefer to just own a diversified basket of securities in that market, limiting company specific risks’.

Cautiously optimistic – Are you optimistic or not? This is another way of hedging. There always are/should be reasons to be cautious in investing but this term just adds confusion and makes any commentary vague.

Take profits – This is yet another clever way to hedge. Is it worth selling or buying? From a portfolio construction point of view, yes, if you are sitting on a position that is becoming too high of a weighting, you should take profits and rebalance. This, however, is different when talking to a general audience about a particular investment. It is either worth buying or not. Saying it is worth owning some, but take some gains if you have them is a sly way to say it is both a buy and a sell…whatever that means. 

Easy money - We THINK this is supposed to refer to returns on a stock that are made more from a market that has been on a general uptrend, opposed to specific events occurring at a company. But what it really means is that a lot of money has already been made and the individual saying it missed out on this ‘easy money’. Making money (or getting a promotion, success, etc.) always looks easier when someone else has made/done it!

You get what you pay for – Often this is true but in the financial industry, not so much. This is a classic phrase used to defend high fees. If it is used on you, simply ask what exactly you are getting to justify those fees. At least then you are able to make an educated decision on the services being provided, opposed to the question being brushed off with a phrase such as ‘Well, you get what you pay for’.

Money is leaving the market – With every seller there is a buyer, so the money that is ‘leaving’ is actually being replaced by new money, which makes this statement confusing.  We are also not sure what this is supposed to signal. Does it mean that now is a great time to buy because sentiment is at a low, or does it say that all the professionals are sitting on the sidelines and therefore you should too?

Don’t forget, Peter Hodson will be giving his top stock picks on BNN Market Call at 1PM on January 15^th. Sign up for the blog below to be updated on his picks after his appearance and to get more updates on market and stock insights.