If you’ve been reading too much “financial porn,” you might be tempted by the “skirt-length theory” and try to “buy the dips” of a “widow-and-orphan stock,” and then hope for a “dead cat bounce” so you can do some “naked shorting.”
Those are all terms used in the business world, and among the entries in the new Financial Writer’s Stylebook: 1,100 Business Terms Defined and Rated.
Written by Chris Roush and Bill Cloud, both professors at the University of North Carolina in Chapel Hill, it’s a handy and much-needed guide through the sometimes tortured, sometimes funny jargon of the business world. (Full disclosure: Cloud is a board member of the American Copy Editors Society Education Fund, of which this columnist is president.)
The book, just published by Marian Street Press, lists not just those somewhat rare terms, defined below, and more basic terms in business writing, it also gives guidelines on how to report an earnings story, a skill increasingly important as companies become more adept at hiding their true financial health. Roush and Cloud rate the obtuseness of terms from $ to $$$$$, so writers will have an idea of whether they need to define them for readers of their publications.
It also has many company names, perhaps less useful as mergers and acquisitions add and erase names quickly, and some seemingly random trademarks, and includes legal issues and ethics guides for business journalism. (An online companion, scheduled to launch in January, will allow updates.)
Now, for the definitions.
“Financial porn,” which the authors attribute to the financial writer Jane Bryant Quinn in 1998, is “articles that encourage readers to make investment decisions that may not be wise, but will sell magazines and newspapers.” The “skirt length theory,” which few take seriously, predicts that “if skirts are becoming shorter, then the market is supposed to rise, and vice versa.” (That one is rated $$$$, meaning most publications will need to define it for their readers.) “Buying the dips,” rated $$$, is “when investors purchase shares or bonds after a decline in their price.” A “widow and orphan stock” ($$$) is a safe, low-risk stock that pays dividends, though, the authors note, “General Motors Corp. was once considered a widow-and-orphan stock, as were bank stocks.” A “dead cat bounce” ($$$$) is “a temporary recovery in the market after a prolonged drop, typically followed by a continued decline. (The Oxford English Dictionary traces that term to 1985.) And “naked shorting” ($$$$$) is “the illegal practice of shorting the stock without actually having the stock to short.”
So if someone is given the choice of a “golden parachute” (“lucrative benefits given to top executives in the event the company has taken over by another firm”) or “golden handcuffs” (long-term incentives promised to employees or executives so that they will remain with the company”), now you know where to invest the time to look it up.
Correction: This article initially said that Jane Bryant was the journalist who coined the term “financial porn.” Her name is actually Jane Bryant Quinn. CJR regrets the error.
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