Lost in translation: How to sound the business when you don’t know what you’re talking about
A beginner’s guide to business jargon
Even Gordon Gekko would get lost with some of today’s business jargon
Do you know your CDOs from your CFDs? Would you be able to spot a black swan if it jumped up and bounced a dead cat off the floor? Or do you sometimes want to stand up on the bus and proclaim that you’re not sure what the Hang Seng is, but you wouldn’t say no to one with a dollop of mustard and a mug of tea?
Don’t panic. As a non-business reporter who spent 15 years working for a business newspaper, I can help. My first tip is this: it’s rarely a good idea to start discussing your lunch intentions with a busload of strangers.
My second offering is below: a glossary of simple explanations for the twenty most arcane, oblique and -- in many cases, spirit-sappingly annoying -- terms you’re likely to encounter in the business pages.
Asset stripping: Taking over a company and disposing of its assets one-by-one, at a profit, without regard for the business’s future, possibly in the ruthless and swashbuckling manner of Gordon Gekko in the film Wall Street.
Bear market: A market in which share prices are falling consistently and significantly from their peak. The opposite is a bull market, in which prices are rising. The name is sometimes said to derive from the historic trade in bearskins, in which bearskin jobbers, or middlemen, would sell skins they had yet to receive. The jobbers would find a buyer for the skins at the higher price, hoping prices would have fallen by the time they had to pay for them -- an early example of short selling (see below.)
Black swan: An event that no-one could possibly have foreseen -- such as the existence of black swans in the days before the discovery of Australia. Or the fact that houses prices which had more than doubled in six years, might actually go back down one day.
CDOs: Collateralised debt obligations. These are structured financial products which pool together and repackage assets -- such as mortgages or loans -- and sell them on to investors. CDOs were first used in 1987, but remained a niche product until the early 2000s, when someone hit on the bright idea of bundling sub-prime mortgage loans together into one, attractive-sounding investment opportunity. And we all know how that worked out.
CFDs: A contract between two parties which stipulates that the seller will pay to the buyer the difference between the current value of an asset, and its value at contract time. If the value has fallen, then the buyer pays the seller. The term was popularised -- if that’s the right word -- in Ireland by the fallout from Sean Quinn Snr’s ill-fated stake-building in Anglo up to 2008.