Wall Street’s Secret Language Revealed

Say these five words out loud really fast: Splitting, Backwarding, ZIRP, NIRP, Contango.

Did you do it

If so, do you sound like a foreign language cheerleader?

These are the actual words used by many businessmen, gurus and Wall Street promoters.

They may sound funny or confusing but they serve different purposes. (1) They express or describe certain market conditions. (2) They act as “signals” for business purposes. (3) They are meant to confuse and / or influence you.

And these are just a few of the many words, abbreviations, and sayings that make up Wall Street’s “secret language.”

Interestingly, most people (including themselves) are not influenced by words that are meaningless.

However, if you have a basic idea about them, you will be better equipped as an investor and more likely to be ahead of the crowd. Think of it as learning the “point connection” of a financial puzzle.

Compare this to trying to run a business in a foreign language (German, French, Japanese, Greek, etc.). If you do not understand the language, you will probably lose money … a lot of money.

So, just like learning any language, you need a good teacher or translator so that it is simple and easy to understand.

That’s where we come from.

In this article we are going to feature a few words so that you can see how easy it is to learn a language and at the same time understand how Wall Street makes things so confusing.

Let’s start with ZIRP. It is an acronym for “zero interest rate policy.”

It began after the 2008 recession to “allegedly” stimulate the economy. The fact is that ZIRP has severely damaged the pension plans of most countries. (Their interest rates need to be high to fund their plans for their pensioners.) ZIRP has also crippled most senior citizens who rely on interest from their investments to survive.

Although the rates continue to rise slowly, it will take a long time for ZIRP to recover.

But, let’s move on to NIRP. This is another acronym for “Negative Interest Rate Policy.” Yes, you read that right. Negative interest rate policy.

This has led to more parallel losses since the 2008 meldown and has been effective in most European countries.

Here’s the crazy part. When a country’s government bonds have a negative interest rate (currently -0.05% to -0.36% or more) investors have to pay them to hold their money.

It’s a losing proposition for investors and it’s hard to imagine anyone buying bonds at a negative rate but millions have been sold.

We’ve only scratched the surface here but hopefully you can see how these short words are very confusing and confusing.

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