Money Talk: From Alphabet Stock to Naked Sale - Words and Phrases That Control Your Money by Lorraine Spurge

From the Publisher

Is it beneficial to invest in widows and orphans?
How do you feel about a naked sale?

Intriguing questions, but what do they mean? As anyone who's ever tried to decipher their last investment account statement knows, the language of finance can sound foreign and intimidating. But it doesn't have to be. As clever as it is straightforward, and filled with quirky yet enormously helpful tips, this dictionary of financial terms and acronyms is packed with hundreds of definitions that will appeal to the novice and seasoned investor alike. Simple to use, and filled with examples and illustrations that clarify even the most complex concepts, Money Talk strips down the fancy lingo into manageable bits of information that actually makes sense — and helps readers get a better handle on the chaotic and ever-changing world of finance. Whether you're slumped over an income tax form or trying to hold your own at a cocktail party filled with investment wonks, Money Talk reminds readers that managing your money is really just a matter of common sense.

Lorraine Spurge began her career as a secretary and went on to the highest ranks of the investment banking world. Today, she is head of her own firm. Spurge Ink! publishes business information for all individuals interested in making money, building their careers, and achieving independence and success. She also appears on CNN and CNBC to discuss financial matters. She lives in Los Angeles.

Publishers Weekly

Lorraine Spurge (Money Clips) rose through the ranks of Wall Street from secretary to legend (she's credited with raising more money for American businesses than any other woman), so she knows that even the most modest investor can learn to speak and read finance-ese with a little help. In Money Talk: From Alphabet Stock to the Naked Sale--The Words and Phrases That Control Your Money, she clearly and engagingly defines familiar terms (blue chips, debit card and intestate) as well as more arcane ones, including such antitakeover tactics as "the Pac Man defense" and the "poison pill," and a "tangerine" ("a company with the potential to be separated into juicy segments"). Copyright 2000 Cahners Business Information.

Library Journal

Do we really need another dictionary of financial terms? When the author is Spurge, former investment banker and Wall Street insider, the answer is an enthusiastic yes. Spurge has compiled an authoritative list of hundreds of financial words and acronyms, from "abatement" to "zero coupon bonds," all designed to enlighten the average reader. She provides a good overview of "bankruptcy" and its different types (Chapters 7, 11, and 13), and "derivatives," never an easy concept to grasp, is given a fairly easy-to-understand explanation. While she does define "hedging," she unfortunately omits "hedge funds," which have been in the news. Internet terms like "hypertext" are covered, but, curiously, Spurge overlooks "day trading." A few names are included (Michael Bloomberg, Warren Buffett, Milton Friedman, T. Boone Pickens) but only briefly annotated. While not as comprehensive as Robert J. Shook's Wall Street Dictionary (LJ 5/1/99), this is certainly an enjoyable book to read and a welcome addition to any business reference shelf. Recommended for larger business/ financial collections.--Richard Drezen, Washington Post News Research/NewYork City Bureau Copyright 2001 Cahners Business Information.

Booknews

A dictionary of financial terms for the same "small" investors who might have seen Spurge discussing personal finance on CNN and CNBC. The definitions, examples, and illustrations are written in plain language with the aim of demystifying Wall Street's "two-dollar terminology." "With a little common sense and the right translation," Spurge writes, "all of us can master our financial lives." Annotation c. Book News, Inc., Portland, OR (booknews.com)

Product Details

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"Basis points," "currency futures," "net present value" — as anyone who's tried to decipher an investment account statement knows, the lingo of finance can sound like a completely foreign language. There you are, with all of your 401k, mutual fund, and bank account statements spread out, determined to put your financial house in order, when the terrible truth dawns on you: you don't know what any of these words mean. Resolutely, you read the definitions in the tiny print on your statement. Now you're even more confused. Can't people just tell you what a call option is in plain English?

Of course they could, but they don't. Because they're more concerned with sounding official than with showing you the ropes. That's where Money Talk comes in. This is the book that will tell you what a call option is (in the plainest English) and even give you an example to boot. How many times have I wished someone would give me the real lowdown instead of a formal definition — and that's exactly why I compiled this book.

Money Talk is packed with the kind of plain-spoken definitions, examples, and illustrations that I would have liked to have during those late nights with my calculator. Even though I spent all of my days on the front lines of high finance, I could still he stumped by the lingo in my pension fund statement. I couldn't tell the difference between a "defined benefit" and a "defined contribution" plan, and the literature was doing nothing to make things easier.

Even today, when I think I've tackled every investment issue there is, I often run across a new term that baffles me. That's because Wall Street continues to invent weird and complex instruments with even weirder names (and nicknames) to match. And acronyms — who can keep up with the acronyms? Between LIBOR, LYONs, and LEAPS, there are days when the alphabet soup of the finance pages makes me run for my definition guide, which never seems to include what I'm looking for. That's why I've put together Money Talk.

I almost always find that, once you've got the right translation, these terms aren't so complicated at all. Heck, none of this stuff is really that confusing once you get past the two-dollar terminology. A call option? Really just another way to bet that a stock will go up. Net asset value? Essentially, the price of your mutual fund shares. Now, that's not so baffling, is it?

As always, I am a firm believer in the sensible mind of the "small" investor. With a little common sense and the right translation, all of us can master our financial lives. So get out those mutual fund statements one more time — with your copy of Money Talk firmly in hand. Now you can be your own expert.

accelerated cost recovery system (ACRS)

Method of depreciating fixed assets for tax purposes. The most recent version is called the modified accelerated cost recovery system (MACRS).

ACRS and MACRS are forms of accelerated depreciation. Congress created ACRS in 1981 and MACRS in 1986. Assets placed in service after 1980 and before 1987 fall under ACRS; those placed in service after 1986 fall under MACRS. The purpose is to encourage investment by letting companies recover the cost of acquiring productive assets more quickly with relatively greater depreciation deductions early in an asset's life.

Under the ACRS system, instead of basing depreciation deductions on the individual useful life of a particular asset, you can group assets into eight basic property classes. The salvage value is ignored when calculating depreciation deductions.

interest coverage ratio

Measure of how well a company's pretax operating profit covers its debt payments.

Example
Your company reported interest expense of $800,000 in fiscal 1994. Its pretax profit that year was $20,000,000, so interest payments were covered by a multiple of 25:

$20,000,000 ÷ $800,000 = 25 (interest coverage ratio)

If a company's operating profits remain strong and interest rates are low, borrowed money can help finance a company's growth. But if operating profits are weak and interest rates are high, too much debt can lead a company to default on its payments.

What's the best interest coverage ratio? That depends on the steadiness of a firm's earnings. There's no magic number. For a company whose profits are extrasensitive to cyclical ups and downs, less borrowed capital is best, analysts maintain.

original issue discount bond (OID)

Bond initially sold below its par value, or its redemption value at maturity. The difference between par value and the purchase price is the original issue discount. Investors must pay regular income tax, not capital gains tax, on this amount.

Companies like to issue bonds with an OID — especially zero-coupon bonds — because they can deduct the value of the interest as they go along even though they don't shell it out until maturity. Investors, though, must pay income tax on the amount they realize on paper even though they don't get the payments until later.

Copyright © 2001 Lorraine Spurge