Thinking Space

All of us fall victim to the terminology trap. We try to get used to of terminology faster to avoid looking dumb in a meeting or discussion. This very fact prevents our thinking.

In an interesting article, John Lanchester explains some of the financial terms and their current meaning.‘Hedge Funds’ were supposed to be safer investments. ‘Hedge’ literally means putting a barrier around your investments so that if one bet goes wrong other would protect your money.

‘Hedge Funds’ were supposed to be safer investments. ‘Hedge’ literally means putting a barrier around your investments so that if one bet goes wrong other would protect your money.

However, we saw that so many of hedge funds went bust during 2009 t0 2012 time.

‘Securities’ meant safe but now it means making something tradable.

‘Credit’ now means debt.

‘Leverage’ means borrowing money.

‘Bail out’ which was used as e.g. ‘to slope water over the side of a boat’. This now means ‘injecting money’ rather public money in failing institutions.

We can’t change their current meaning but next time you come across a terminology just pause to understand what they were meant.