In these days of market volatility, hedge-fund managers and executives at all types of money management firms have been forced to explain why their funds are shutting down, losing money hand over fist, and freezing investors’ funds, notes the prolific Daniel Gross on Slate.com.
When they do so, however, they frequently lapse into a strange euphemistic dialect. And so, it may be helpful to provide a handy “Hedgie-English” glossary, says Gross, author of Pop! Why Bubbles Are Great for the Economy.
Gross’s Hedgie-English glossary, for any occasion, with his full explanations on Slate.com:
Hedge-Fund Phrase: Challenging
Translation: Run for the hills!
Hedge-fund managers never piss away money. They just face challenges, says Gross.
Hedge-Fund Phrase: Unprecedented, unique circumstances
Translation: Stuff happens. But we had no clue.
Strangely, these same models failed to predict the once-in-10,000-year events that roiled the markets in 1997, 1998, 2001, and 2002.
Hedge-Fund Phrase: Market volatility has produced unfair, unrealistic prices.
Translation: The market is efficient only when it works in our favour.
Several money managers blamed their temporary problems on investors’ irrational collective behaviour, he writes. Sentinel’s the latest to try this tack – but this has a fine heritage, right back to LTCM itself.
Hedge-Fund Phrase: Our results were affected by the selling behaviour of other firms.
Translation: We made the same dumb trades as everyone else.
Hedge-Fund Phrase: We just want to protect investors.
Translation: We just want to cover our butts.
Hedge-Fund Phrase: This isn’t a rescue.
Translation: THIS IS TOTALLY A RESCUE!!!!!!!
If you believe those lines, I’ve got some subprime debt I’d like to sell you, says Gross.