The Devil's Financial Dictionary
OL lists title in lower case
Summary
Jason Zweig, who writes the Intelligent Investor column for the Wall Street Journal, produced this in the form of Ambrose Bierce's Devil's Dictionary: satirical definitions of financial terms. The satire carries real content.
Each entry states what a term is claimed to mean and then what it means in practice, and many include genuine etymology and market history. Zweig traces words back to their origins, frequently showing that a term now used as marketing began as a description of something disreputable. The definitions accumulate into a coherent position: that the financial industry's vocabulary exists substantially to conceal costs, to make ordinary outcomes sound like skill, and to persuade clients to transact.
His recurring targets are fees and their presentation, the language of forecasting and its false precision, the reclassification of risk as opportunity, the marketing of complexity, and the conflation of activity with value. The book is short, funny and quotable, and it is more useful than most straightforward investment books because the definitions are memorable in a way that arguments are not. It is not a reference and does not teach finance; it teaches scepticism about a vocabulary.
Key takeaways 7
- Financial vocabulary is constructed substantially to conceal costs and to make ordinary outcomes appear to be the result of skill.
- Many respectable financial terms began as descriptions of disreputable practices and were rehabilitated by usage.
- Forecasts are presented with a precision that their accuracy has never justified.
- Complexity in a financial product usually exists to prevent the buyer from computing what they are paying.
- Activity in a portfolio is presented as value creation and is more reliably a source of cost.
- Zweig argues that a term describing risk as opportunity is doing marketing rather than analysis.
- The industry's language treats the investor's money and the manager's money as though the interests attached to each were the same.
Who should read it
Investors who want a memorable inoculation against financial marketing language, and anyone who enjoys etymology attached to a serious point.
About Jason Zweig
Columnist, 'The Intelligent Investor', The Wall Street Journal; previously Money, Time and Forbes
Your Money and Your Brain brought neuroeconomics to a general investing audience, and his annotated edition of Benjamin Graham keeps a canonical text usable for modern readers.
Where it sits in the reference 2
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