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Raghavendra Rau

Raghavendra Rau

Financial Media Expressions And What They Really Mean

March 19, 2002

Cigarettes come with health warnings. Maybe financial journalists should, too.

In recent years, I have done a handful of columns where I took phrases frequently heard on Wall Street and then offered my translation for what those comments really mean. Along the way, I have poked fun at brokers, market strategists, money managers and ordinary investors.

But why stop there? Often, financial journalists also fail to say what they really mean. Examples? Consider the 25 comments below, variations of which often appear in the media. The list was put together with help from investment experts William Bernstein, Kevin Bernzott, Meir Statman and Alan Weiss.

"The banking community is divided": We called two sources and got different opinions.

"A spokesman for the state securities commission declined to comment, citing its ongoing investigation": Which got started when we called the agency and asked whether investigators were looking at the issue.

"Ms. Smith, who isn't involved in the lawsuit, says the late-day announcement is good news for the plaintiff": We were on deadline, and nobody was picking up the phone, so we called Ms. Smith instead.

"A company spokeswoman declined to comment": But off the record, we got an earful from the executive vice president.

"Experts are still trying to untangle the legal issues involved": We talked to three lawyers, and we still don't understand what's going on.

"The euro set new lows for the session on signs of a U.S. economic rebound": We haven't the slightest inkling what the connection is between the euro and the U.S. economy. But there has to be some explanation for the currency's tumble.

"Stocks are expected to open lower on Monday": Sure, we're right only half the time. But Sammy Sosa would kill for that sort of batting average.

"Considered one of Wall Street's most iconoclastic strategists, Mr. Wharton predicts the Dow Jones Industrial Average will plunge below 5000": Sure, the guy is off his rocker. But he makes great copy.

"Bond prices fell in anticipation of higher interest rates": Or maybe interest rates rose in anticipation of lower bond prices. How could we possibly know? We majored in English.

"Many investors fear there's more stock-market carnage to come": Everybody in the newsroom is totally freaked out.

"Want to become a millionaire? Try our five-step program": With enough time, a high savings rate and outsize investment returns, we can assume our way to anything.

"Looking for big gains in the year ahead? Here are seven stocks that are set to sizzle": Reader amnesia is our best friend.

"While many small investors have suffered big losses recently, few can rival the dismal record of Mr. Warren, who owns just three stocks -- Kmart, Enron and Global Crossing": Can you believe this guy agreed to speak to us? It's amazing what people will tell the press.

"Jim and Betty Hancock, shown in the accompanying photograph, began diligently saving for college soon after their first child was born": Actually, the Hancocks seem to spend most of their spare time at the local mall. But they sure photograph well.

"Like thousands of other investors, Wendy Evans was badly burned by last month's partnership debacle": You wouldn't believe how many calls we had to make and how many Internet bulletin boards we had to scour before we found this woman.

"Here are our 10 funds to buy now": One will be a great performer, seven will be mediocre and two will be total dogs. But which is which? You will have to figure that out on your own.

"See our list of last year's top-performing mutual funds": Which may be useful if you are the kind of person who drives using only the rearview mirror.

"Many investors ignore costs when picking mutual funds. But that can be a big mistake": First, we make an unsubstantiated claim about investor behavior. Then, we argue that these folks are foolish. Ah, sometimes there's no sweeter scent than a straw man burning.

"Indeed, if you had blindly bought into the prior year's hottest sector, you wouldn't have made any money over the past decade, once you figure in inflation, taxes and trading costs": We tortured the data base until it confessed.

"The fund's risk-adjusted performance is among the best in the growth-and-income category": Its raw performance stinks.

"Despite the fund's dazzling record, analysts say it should account for only a small portion of your portfolio": If you stick any money in this fund, don't blame us.

"The fund's recent performance reads like a chapter out of a Stephen King novel": When we were kids, we used to pull the legs off spiders.

"Last quarter's top-performing fund manager thinks further gains lie ahead": Remember what we said about ignoring short-term performance? Scratch that.

"The fund's manager avoids swinging for the fences, instead aiming to hit singles and doubles": Maybe the sports page has some openings.

"Today's boardroom Sturm und Drang left many observers with a sense of déjà vu": And if the foreign editor asks, tell her our Italian is also pretty good.