In honour Of The Market Crash, Here Are 18 Meaningless Market Phrases That Sound Smart On TV

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The market’s crashing again, which means media outlets will soon be decorated with a parade of pundits saying meaningless things.

Meaningless?

Yes, meaningless.

Much of what these folks say will sound smart and sophisticated, but if you listen closely–and think about what you’ve just heard–you’ll realise that the pundits aren’t really saying anything.

(The art of sounding smart while saying nothing is critical to survival in a business in which folks are supposed to be able to predict the future. No one can reliably predict the future, so this supposition is ludicrous, but that doesn’t stop everyone from trying.)

To prepare you for this onslaught, we’re republishing our list of 16 Meaningless Market Phrases That Sound Smart On TV — and adding a couple more that you hear especially often during a crash.  You’ll hear a lot of these over the next few weeks.

And, by the way, in case you’re curious, here are the real reasons the market’s crashing:

  • Because stocks are expensive on one of the only valuation measures that is actually valid–“normalized” P/E ratios
  • Because the global economy is deteriorating rapidly
  • Because corporate profit margins are near record highs and therefore only have one way to go (down)
  • Because interest rates are already near zero (hard for Fed to rescue us)
  • Because the United States has not even begun to address its massive debt and deficit problem
  • Because there’s almost no way our government would approve another stimulus plan
  • Because Europe is imploding, and there’s just no way to save it for good without massive disruption and pain
  • Because investors have gotten complacent and are now suddenly remembering that stocks are risky investments

Will the crash continue? No one knows. Presumably the Federal Reserve will soon come charging in with more “quantitative easing” (QE3) and that might provide a short-term boost. Perhaps the economy will stabilise at “crappy” instead of “recession.” Perhaps the European Central Bank will come up with yet another plan to kick the can down the road. Perhaps everyone will wake up tomorrow convinced that stocks are “oversold” and that it’s time to “buy on weakness.” (Two of the meaningless market phrases).

But valuations are still high, the economy’s still a mess, and the government is basically paralysed, so it’s not difficult to imagine that there will be more weakness ahead.

When you'll hear it: When the market's dropping rapidly--like now.

Why it's smart-sounding: It implies wise, prudent caution. Stocks are dropping. No one knows where the bottom is. Obviously you shouldn't step in and buy because you'll just get clobbered.

Why it's meaningless: Because no one ever knows where the bottom is. Sometimes stocks drop sharply...and then keep dropping sharply. Sometimes stocks drop sharply, and then rebound sharply--rewarding those who had the balls to buy while everyone else was selling. Except in hindsight, no one can tell the difference.

What's actually smart: As counter-intuitive as it sounds, the more stocks fall, the more attractive they become. American companies are not worth zero, so the closer stock prices get to zero, the more likely you are to be buying them at a discount to what the companies are actually worth (which, by the way, no one knows for certain, so don't get fooled into thinking that someone does). So the more that knife falls, the more you should want to try to catch it.

When you'll hear it: In the middle of a market crash like this one.

Why it's smart-sounding: It suggests that there's a way to tell when the crash is about to be over--so you can safely buy in while everyone else is selling out. The idea is that, if you 'wait until you see the whites of the markets eyes,' you'll buy right at the moment of mass panic. Then, as soon as you have bought, there will be no more sellers left, and stocks will soar.

Why it's meaningless: Because it's meaningless. 'The whites of the market's eyes'? Give us a break. One alternate version of this concept--'wait until the 'puke point,'' is equally meaningless. All the way down in the market crash of 2008-2009, pundits talked about waiting for the 'puke point.' And when the market finally turned, without investors suddenly 'puking' or without the market revealing the 'whites of its eyes,' everyone missed the move.

When you'll hear it: Any time a guest doesn't have the balls to say 'buy' but wants to be able to say later that he/she told everyone to buy if the stock should happen to go up.

Why it's smart-sounding: It sounds highly informed. It sounds prudent (don't be stupid and chase the stock here). It sounds like common sense. It allows you to take credit for predicting any bullish move in the stock, while also being able to say 'I said buy on weakness' if it crashes. It hedges all future outcomes.

Why it's meaningless: It's too vague to be interesting or helpful. It can be applied to almost any stock or market at almost any time. It reveals that the speaker has little or no conviction about what he or she is saying and just wants to have it both ways.

General: The corollary to 'buy on weakness.'

When you'll hear it: Any time a guest doesn't have the balls to say 'sell' but wants to be able to say later that he/she told everyone to sell if the stock goes down.

Why it's smart-sounding: It sounds highly informed. It sounds prudent (don't be stupid and sell the stock here, when it's already down). It will allow you to take credit for predicting any downward move in the stock, while also being able to say 'I said sell on strength' if it soars. It hedges all future outcomes, at least over the near term--by implying that the stock will eventually trade higher than it is today, and lower.

Why it's meaningless: It's too vague to be interesting or helpful. It can be applied to almost any stock or market at almost any time. It reveals that the speaker has little or no conviction about what he or she is saying--and, instead, just wants to have it both ways.

General: A perennial favourite, especially when stocks are going down and worries are increasing.

When you'll hear it: Any time a guest doesn't have the balls to make any predictions or recommendations whatsoever.

Why it's smart-sounding: It sounds prudent and cautious. It sounds appropriately sceptical. It plays to the viewer's sense that, somehow, things are more uncertain now than they usually are. (Absurd--the future is always uncertain.) It sounds like there's a specific event or events that you're waiting for that will suddenly turn you into the Donald Trump of Conviction, instead of suggesting that you're just perpetually wishy-washy. But it doesn't actually specify what this event or events are.

Why it's meaningless: It means nothing. How long are you going to wait? What are you waiting for? Why, when what you're waiting for finally arrives, won't everyone else see it at the same time and bid prices up or down? Why will the future be any less uncertain tomorrow, or next week, or next year, or whenever it is you're planning to 'wait-and-see' until? What are you waiting for?

When you'll hear it: When a guest is asked whether investors should buy a market or stock that has already gone up a lot.

Why it's smart-sounding: It implies wise, prudent caution. It implies that you bought or recommended the stock a long time ago, before the easy money was made (and are therefore smart). It suggests that there might be further upside but that there might also be future downside, because the stock is 'due for a correction' (another smart-sounding meaningless phrase that you can use all the time). It does not commit you to any specific recommendation or prediction. It protects you from all possible outcomes: If the stock drops, you can say 'as I said...' If the stock goes up, you can say 'as I said...'

Why it's meaningless: It's a statement of the obvious. It's a description of what has happened, not what will happen. It requires no special insights or powers of analysis. It tells you nothing that you don't already know. Also, it's not true: The money that has been made was likely in no way 'easy.' Buying stocks that are rising steadily is a lot 'easier' than buying stocks that the market has abandoned for dead (because everyone thinks you're stupid to buy stocks that no one else wants to buy.)

A classic. Can be used in almost all circumstances and market conditions.

When you'll hear it: Pretty much anytime.

Why it's smart-sounding: It implies wise, prudent caution, but also a sunny outlook, which most people like. (Nobody likes a bear, especially in a bull market). It sounds more reasonable than saying, for example, 'the stock is a screaming buy and will go straight up from here.' It protects the speaker against all possible outcomes. If the market drops, the speaker can say 'As you know, I was cautious...' If the market goes up, the speaker can say, 'As you know, I was optimistic.'

Why it's meaningless: It's too general to mean anything. It could have accurately described any market outcome in history, merely by adjusting the unspecified time frame. (If you were 'cautiously optimistic' in 1929, you were 'cautious,' which was good, and you were also optimistic, which was also good. Eventually, the market recovered!)

Another classic. Sounds smart, but is completely meaningless.

When you'll hear it: Especially useful in bear markets or flat markets, but can be used anytime.

Why it's smart-sounding: It suggests that the current market environment is different from other market environments and therefore requires special skill to navigate. It implies that the speaker has this skill. It suggests that, if you're talented enough to be 'a stockpicker,' you can coin money right now--while everyone else drifts sideways or loses their shirts.

Why it's meaningless: If you pick stocks for a living (or for your personal account), all markets are 'stockpickers' markets.' In all markets, traders are trying to buy winners and sell dogs, and in all markets only half of these traders succeed. (It's a different half each time, of course--and most of the 'winnings' of the winners are wiped out by transaction costs and taxes, but that's a different story). It is no easier (or harder) to win the stockpicking game in a flat or bear market than in a bull market, and if you try, you'll almost certainly do worse than if you had just bought an index fund.

When you'll hear it: All the time.

Why it's smart-sounding: It sounds deeply profound--the sort of wisdom that can only be achieved through decades of hard work and experience. It suggests the speaker understands the market in a way that the average schmo doesn't. It suggests that the speaker, who gets that the stock market is actually a 'market of stocks,' will coin money while the average schmo loses his or her shirt.

Why it's meaningless: Because it's a statement of the obvious. Of course it's 'a market of stocks.' But it's also a 'stock market.' And viewing the stock market as a 'market of stocks' doesn't help you in any way, other than reminding you that all stocks don't move up and down the same amount. (See: 'It's a stockpickers' market.')

When you'll hear it: All the time.

Why it's smart-sounding: It sounds generally optimistic, which viewers will like, but it doesn't commit you to any specific recommendation or prediction or time period. It doesn't even require you to to say that the market will go up or down or how you are investing or think the viewer should invest. It just sounds generally optimistic, and it leaves you plenty of wiggle room if the market suddenly tanks.

Why it's meaningless: Because being generally optimistic about the market over some unspecified time period is no different than being generally optimistic about life over some unspecified time period: Odds are, whatever happens, life will go on and the world won't be destroyed by an asteroid. And, besides, you're not even saying you're 'optimistic.' You're saying you're 'constructive.' That can mean anything!

That's Business Insider's Katya Wachtel in the screenshot above, by the way. She would never say anything as mealy-mouthed as 'constructive.'

When you'll hear it: When a guest is asked to explain why the market (or a stock) is down after a strong run.

Why it's smart-sounding: It sounds like you know what professional traders are doing, which makes you sound smart and plugged-in. It sounds like common sense: Traders have made a lot of money--now they're 'taking profits.' It doesn't commit you to a specific recommendation or prediction. If the stock or market goes down again tomorrow, you can still have been right about the 'profit taking.' If the stock or market goes up tomorrow, you can explain that that traders are now 'bargain hunting' (see next smart-sounding meaningless phrase).

Why it's meaningless: Traders buy and sell stocks for dozens of reasons. And for every seller, at any time, there is a buyer on the other side of the trade. Whether or not the seller is 'taking a profit'--and you have no way of knowing--the buyer is at the same time placing a new bet on the stock. So collectively describing market activity as 'profit taking' is ridiculous. Any trade, at any time, in any market, can be described as 'taking a profit' or 'cutting a loss' or 'bargain hunting' or 'filling out a position,' and so on. You have no way of knowing what's actually going on, and there's always someone on the other side of every trade. But no one will ever prove you wrong!

That's Business Insider's Joe Weisenthal on the left. He knows better than to say 'profit taking.'

General: The corollary to 'profit taking.'

When you'll hear it: Any time a guest is asked to explain why the market (or a stock) is up after a period of weakness.

Why it's smart-sounding: It sounds like you know what professional traders are doing, which makes you sound smart and plugged-in. It sounds like common sense: Traders have been sitting on the sidelines waiting for the market to fall--and now they're 'bargain-hunting.' It doesn't commit you to a specific recommendation or prediction. If the stock or market goes down again tomorrow, you were still right about the 'bargain hunting.' If the stock or market goes up tomorrow, you can explain that that traders are now 'taking profits' after yesterday's 'bargain hunting.'

Why it's meaningless: Again, traders buy and sell stocks for dozens of reasons. And for every buyer, at any time, in any market, there is a seller on the other side of the trade. Whether or not the buyer is buying because he or she thinks they have found a 'bargain'--and you have no way of knowing--the seller is at the same time ditching the stock, perhaps because he or she is 'profit taking.' So collectively describing this activity as 'bargain hunting' is ridiculous. Any trade, at any time, in any market can be described as 'taking a profit' or 'cutting a loss' or 'bargain hunting' or 'filling out a position,' and so on. You have no way of knowing what's actually going on. But no one will ever prove you wrong!

When you'll hear it: When a guest is asked to explain why the market (or a stock) is going up.

Why it's smart-sounding: It sounds like you know what's really going on, which makes you sound smart and sophisticated. It sounds like you understand how the market works, in a way that Joe Schmo doesn't. (Ahh...there are more buyers than sellers! Insightful! Fascinating!)

Why it's meaningless: In every trade--every one--there is exactly one buyer and exactly one seller. You cannot buy a stock without having someone sell it to you. To say that the market or a stock is going up because there are 'more buyers than sellers,' therefore, is not just meaningless, it's wrong. What is actually happening when a stock or market ticks up is that the next buyer is willing to pay more for the stock or market than the last buyer was. What is actually happening when the market or a stock goes down, meanwhile, is that the next buyer is not willing to pay as much for the market or stock as the last buyer was. There are never 'more buyers than sellers' or 'more sellers than buyers.' There are simply different price levels at which a buyer and a seller are willing to trade.

General: A classic way to suggest that the market will eventually go up.

Alternates: 'Dry powder.'

When you'll hear it: Any time a guest needs to explain a bullish outlook.

Why it's smart-sounding: It sounds like common sense: Wimpy investors are hoarding cash instead of 'putting it into the market.' When these investors finally grow a pair and use their cash to buy stocks, the market will go up.

Why it's meaningless: There is no such thing as cash 'going into the market' or 'coming out of the market.' In every trade--every one--a seller sells stock to a buyer in exchange for cash. Importantly, the cash used to buy the stock does not go 'into the market.' It goes to the seller. After the trade, the seller now has cash instead of the stock, and the buyer now has the stock instead of cash--and the overall amount of neither cash nor stock has changed. At some times, some investors--mutual funds, for example--might have more cash than usual in their funds (for a variety of reasons), and this cash might eventually be used to buy stocks, but this cash will not go 'into the market.' It will go to the investors who own the stocks that the mutual funds buy. In short, again, cash does not go 'into' and 'out of' the market. Someone always holds the cash, and someone always holds the stocks. So, in a literal sense, the cash is always 'on the sidelines.'

General: A classic way to describe a stock or market that has fallen a lot and might do anything from here.

Alternates: 'Forming a base.' 'Bumping along the bottom.'

When you'll hear it: Any time a guest doesn't know what a stock will do but wants to imply that it might eventually go up but hedge him or herself by saying that it also might go down.

Why it's smart-sounding: It sounds highly informed. The stock is 'in a bottoming process.' It's 'forming a base.' It sounds reassuring, without being too precise. Sure, the stock might drop some more, you seem to be saying, but it's generally settling in here--and then it will eventually go up. It sounds like you have command of 'technical analysis,' which almost always sounds smart (and is almost always meaningless).

Why it's meaningless: Because it describes a price pattern that has happened but does not tell you anything about what will happen. A drop followed by a sideways move does not mean the stock won't drop more. It also does not mean the stock will go up. And it commits to no time frame. It can be used to describe any stock that has moved sideways for a while, without offering the slightest insight into the future.

General: Another classic way to describe a stock or market that has gone up a lot.

When you'll hear it: Any time a guest doesn't know what a stock or market will do but wants to sound generally bullish while also implying that the stock might be 'due for a correction' (also meaningless).

Why it's smart-sounding: It sounds highly informed. It sounds like common sense: The stock just went up a lot--so it must be 'overbought.' It hedges all future outcomes. (Just because it's 'overbought' doesn't mean it will go down. What if it gets more 'overbought'?) It sounds like you have command of 'technical' and 'quantitative' analysis, which always sounds smart--even though they're almost always meaningless.

Why it's meaningless: What does 'overbought' mean, exactly? Does it mean that traders bought too much of the stock? How can they have done that--the amount of stock in the market didn't change. Does it mean that traders paid too-high prices for the stock? OK, maybe it means that. But does that mean the stock is going to go down soon? Why? In short, it's a fancy and sophisticated-sounding way of saying nothing.

General: The corollary to 'overbought.' A classic way to describe a stock or market that has gone down a lot.

When you'll hear it: Any time a guest doesn't know what a stock or market will do but wants to imply that it might go up.

Why it's smart-sounding: It sounds highly informed. It sounds like common sense: The stock just went down a lot--it must be 'oversold.' It hedges all future outcomes. (Just because a stock or market is 'oversold' doesn't mean it will go up. It might get more 'oversold.') Again, it sounds like you have command of 'technical' and 'quantitative' analysis, which always sounds smart.

Why it's meaningless: As with 'overbought,' what does it mean, exactly? Does it mean that traders sold too much of the stock? How can they have done that--the amount of stock in the market didn't change. Does it mean that traders sold stock at prices that were too low? OK, maybe it means that. But does that mean the stock is going to go up soon? Why? In short, it's a fancy and sophisticated-sounding way of saying nothing.

General: A classic way to describe a company that has blown it.

When you'll hear it: Any time a guest doesn't know what a banged-up stock will do next--especially if he or she is worried that viewers might think he or she was dumb enough to have owned it when it cratered.

Why it's smart-sounding: It sounds tough, decisive, and judgmental. You're not going to take management's word for anything--not like those other idiots who just got blown up in the stock. You want to see the results. You want to make management show you that they can deliver, before you entrust them with your clients' hard-earned money.

Why it's meaningless: All stocks are 'show me' stocks. If management 'shows you' that they have delivered results that beat the market's expectations, the stock usually goes up. If management 'shows you' that they have blown the quarter, the stock tanks. Even when applied to the limited realm of companies that have just choked, if management 'shows you' that they can deliver, they'll show everyone else, too. The stock will go up before you can buy it. And then, once the stock goes up, management will have to 'show you' that they can continue to do better. And so on. By the time you and everyone else finally trust management enough again to buy into their vision of the future, the stock will have soared--and it will then be time for management to show you that they've blown it again.

And sometimes, of course, no matter how smart you sound on TV, the producers will make you look like a sex-crazed zealot

But there's not much you can do about that!

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