Monday, July 6, 2009

Evil market jargon?

Jack Hough writes about evil market jargon such as "alpha" "beta" and "second derivative".

Jack doesn't think that we should use such words as they are hard to understand. He suggests instead the following....

Legally, I can’t recommend that you use it to punish those who use the four self-important terms below. That said, if you hear someone use one of the terms, and if you happen to be standing behind them, and if you love America and you’re not holding a dangerously hot coffee at the time (or if it at least has a lid), I think we both know what needs to be done

Jack goes on to say about beta..
In one common but flawed approach, a stock’s risk is defined by its past trading volatility.

Uh, I don't think that's right actually. But I hate to throw the "covariance" word in to the mix given the tone of the article.

Excellent stuff. Mr Hough's columns are brilliant comic relief.