Market Overview

The Real Deal on Wall Street: Kind of Sad Investors Don't Know These Six Words

One integral piece to completing the analytical puzzle for me and selecting stocks for our Decoding Wall St. portfolio is the dissection of action words and jargon.

For instance, if a CEO utters such nonsense as, "sales will be relatively strong," it could mean his or her company's sales - like the industry's - will stink and the stock could circle the drain.

On the other hand, experience has taught me that the more financial jargon (honestly, you have never seen a physical "wall of worry" before) that is used in the papers, on television, and within investment spheres of influence - the likelier it is that stocks are under pressure. Granted this is not a precise tool to activate in stock selection, it's based on feel and experience; in my view however, the use of jargon suggests people are reaching to try and explain complicated events that the market is pricing in daily... by sending stocks lower.

Detailed below are but a few of the terms that have surfaced from my realm since the market topped out in early April. Coincidence that "Spailout" is new on the scene after stocks were in correction mode? I think not!

"Macro Volatility"

Huh? Precisely my sentiment. "Macro volatility" is a stretch of less than stellar economic reports. "Macro" refers to the broader economy, and "volatility" refers to computer generated numbers being mostly worse than the movers and shakers on Wall Street expected.

"Sniff-Test"

A "sniff-test" is an investor being happy with a development initially, and deciding not to dump his/her shares until he/she gathers more information. Visualize sniffing a baby's diaper. All seems well, so you pack up the car and head to the supermarket... only to find out halfway there something no longer smells right and have to pull over at the nearby gas station.

"Mixed Bag"

Perhaps the classic Wall Street saying resulted from old-timers on the Street remembering filling bags of different kinds of candy from the local convenience store in the 1940s. Nevertheless, when the term "mixed bag" is used by economists, analysts, traders, and the like - it means not much is clear in the world of investing. For example, one economic report may signal the labor market is strong, but an earnings report from payroll services firm ADP may stink.

"Mixed bag" ultimately requires investors to do even more homework to fill their heads with reasons why stocks will move up or down.

"Can-Kicking"

The most overused word amongst Wall Street pros is "kicking the can down the road", meant to suggest government officials will pass along problems (financial problems, legislative problems) in the future. Heck, government officials want to stay in power, and will prolong usually obvious decisions to prevent getting booted out of office. "Can-kicking" is the new, more concise way of saying "kicking the can down the road".

"European Divorce"

This one is a new term to the scene, but one with potentially huge global economic ramifications. In a "European Divorce", Greece essentially exits the Eurozone because it's unable to form a government that adheres to previously agreed upon bailout terms. No adherence means no money from Eurozone friends - which means a default and back to being a European loner.

"Havens"

This is the lazy person's way of saying "safehavens," which is meant to cover up that lazy person's way of saying that, "investors are buying investments that are safer than stocks, such as debt issued by the U.S. Treasury."

See more of Brian Sozzi at Decoding Wall St, here.

Posted-In: Financial Advisors Movers & Shakers Psychology Topics Economics Markets Media Trading Ideas Best of Benzinga

 

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