Technical-ese

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Technical-ese

The stock market has a language all its own ”street talk. Terms like zero- coupon bonds , net asset values, and price/earnings ratios are absolutely guaranteed to draw a blank look from the average person on the street. This shouldn't be surprising. Every trade, sport, and craft has a certain number of terms or phrases that are unique to it. And, since language is created by need, specific terms have arisen in each sphere to address this need for description.

TIP

To deal with the fear of technical-ese, or the terminology used in the financial community, keep in mind that as a beginning investor your need for learning these terms is limited.


The terminology used in some areas, in sports for example, is familiar to almost everyone. Most people know what a seventh-inning stretch, a free throw, and a touchdown are even if they've never played or attended a game in their lives. However, in other areas, such as law and medicine, the terminology seems confusing and technical, leading to the general consensus that much schooling and substantial intellectual ability are required to understand any of it.

Unfortunately, finance ”which includes the stock market ”has long fallen into that second category. There could be several reasons why. Perhaps one is the fact that much of finance involves math ”and we all know how we struggled with that in high school. Perhaps it is because Wall Street's conservative image makes us uncomfortable and thus we don't pretend to understand what it's about and we are hesitant to ask.

TIP

While the sheer number of financial terms might be a little overwhelming, learning them isn't as daunting a task as it might appear. Many basic terms are used very frequently and will quickly become familiar.


For the longest time, and to some extent even today, the financial community was dependent on mass ignorance to survive. For example, let's take the term "investment management." This term means just that, the management of investments. Under normal circumstances, the average person certainly wouldn't trust someone else to take care of everything he or she owned. So, investment managers, brokers , and financial analysts regularly tossed out terms that they knew their clients wouldn't understand. Since no one wanted to appear stupid, the clients would simply nod their heads a lot and be grateful that someone was around who could interpret all these obscure terms. By intimidating their clients this way, investment managers kept their clients from realizing investment management was little more complicated than the management of their household finances, which the clients were already doing themselves. Should the masses ever wise up and begin to manage their investments themselves , the jobs of the investment managers would disappear.

In all fairness, however, there are a significant number of specialized terms used in the stock market ”the world of finance has to be described somehow. The financial community is directly involved in almost every aspect of every person's life on the globe today; it employs hundreds of millions of people and is comprised of every industry in existence. Trying to describe all that this includes is going to take a lot of words. But, happily, you certainly don't need to know all the terms in order to be a successful investor. I am a longtime professional financial writer, and I still look things up. All you need to learn are the terms that are relevant to you. And this book is a good place to start. In addition, by gaining a working knowledge of investment terminology, you will be able to manage your own investments should you choose to, just as you manage your own household finances and paycheck. After all, who is better equipped to make decisions regarding your money than you?

As the terms rise in complexity, they are less familiar even to seasoned financial veterans . For example, the percentage of customers in a bar who order a basic drink like a martini will be pretty high. In much the same way, certain words will prove to be the basis for describing your particular financial investments. When a customer orders something strange like a Screaming Viking, the bartender will need to look up that drink recipe or simply ask the customer what is in it. Similarly, when hit with a term you don't understand, you can either look it up or ask someone to explain it to you. By the way, don't be embarrassed to do this. I haven't met anyone yet who doesn't love the opportunity to expound on what he or she knows about stocks. Also, you'll never need to ask again.

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Stock Market Investing 10 Minute Guide
Stock Market Investing 10 Minute Guide
ISBN: 0028636104
EAN: 2147483647
Year: 2000
Pages: 130
Authors: Alex Saenz

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