March 19, 2002
WALL STREET JOURNAL
GETTING GOING By JONATHAN CLEMENTS
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.