By Julio Perez, IAC Guest Blogger
A major complaint most lawyers hear at some point is that they use too much legalese when talking to clients! The world of investments and stocks contains lingo similar to “legalese” (Investalese? Stockalese?) and rookie investors might be putting their money in the hands of “experts” who bombard them with such technical terms without fully understanding where their money goes. The real problem comes when these experts dazzle and awe their clients with this language only to scam them out of their money, with the rookie investor left none the wiser. I, as a neophyte law student who knows nothing of investing and until recently believed the “stock market” was some sort of open-air yard sale, am in the same vulnerable position as any other person trying to get into the stock market and invest into their future.
The purpose of this blog series is to take readers, both experienced and inexperienced, on an educational journey as I take the most cryptic and befuddling investing phrases and break them down into terms simple enough for me to understand (What does it mean to diversify a portfolio, and what does “using derivatives as an effective hedge against their underlying assets” mean?) Each post will begin with the most incomprehensible investing phrase I can think of, and end with the simplest plain-English “translation” I can manage. Each blog post will also contain links to official sources describing the investment terms in greater detail. This blog is by no means intended to be a guide on how to invest and enter the stock market, but hopefully by the end I can help at least some people avoid popular investment traps and better navigate the puzzling world of investments.