Xiang Ji’s Bookshelf

Read this funny thing from Euromoney magazine. Have to quote in full:

Top 10 Financial Definitions That Are Funnier Since the Credit Crunch

Auditor: person that arrives after a battle to finished the wounded.

Bull Market: a random market movement causing an investor to mistake himself for a financial genius.

EBIT: Earnings before irregulatirites and tampering

EBITDA: earnings before I tricked the dumb auditor

Bear Market: Eight months when the kids get no allowane, the wife gets no jeweller and the husband gets no sex.

Broker: the person that you trust with thousands of your hard-earned dollars

Broker: what my broker has made me

Momentum Investing: the art of buying high and selling low

Value investing: the art of bying low and selling low

Stand and Poors: your life in a nutshell.

The list can surely be hugely expanded. In fact, II magazine ran a much longer and pretty funny version last year called Devil’s Dictionary of Finance by Edward Chancellor. Here are a few good ones:

Prime broker: The unit of an investment bank that services hedge funds. Prime broker loans to hedge funds are now securitized and sold on to… hedge funds.

Private equity: A branch of the investment industry run by deal makers rather than investors. This may explain why despite a quarter century of generally rising asset prices and falling interest rates and huge dollops of leverage, investors in buyout funds would, on average, have been better off leaving their money in the stock market. The same cannot be said of private equity’s general partners.

Risk premium: A gauge of investors’ willingness to lose their clients’ money. A high premium occurs only after a lot of clients’ money has been lost and reflects money managers’ fear of losing their jobs.

At 1pm on Thursday, Ladenburg analyst Dick Bove sent out a note on Lehman Brothers to raise the stock to a Buy, basing his belief that a hostile takeover is now possible. Within less than a hour, Lehman’s stock rose from $12.91 to $13.54. With the lightening speed of the market, there is no time to read through Bove’s full report. Only the message is important: buy Lehman.

FT Alphaville points out that the analyst’s past record on stock picking isn’t promising. But that will not matter. An influential analyst will move markets, like it or not.

(REUTERS/Brendan McDermid)

But the market is no fool. Today Lehman’s stock is trading above $15, after news get out on a possible buyout of the struggling investment firm by a Korean bank or some sorts (various media reports including DealZone identified different potential buyers).

So Bove’s speculative note had a $0.63 market movement, while a more substantial news with names of possible buyers and spokesperson’s verification moved the price up $2.00. There is no need to lament an analyst’s poor rating records. The market knows who and what to follow the best.

Some interesting comments from DealJournal on reporting on Wall Street and making it on Wall Street:

“As a one-time investment banker turned columnist, I can tell you it is a tough balancing act for a          journalist to cover Wall Street and its armies of financiers. How does a journalist juggle the need for sources with the need for unvarnished reporting? What should the relationship be between a journalist and his sources?”

“The case of Ron Insana and his hedge fund highlights how permeable the boundary can be between the worlds of journalism and Wall Street.”

Here is a look at the journalist-turned-financier on YouTube: