Investing Memes Explained

There's just no escaping it, people like internet memes?!?

And apparently, they really like investing memes as explained by J. Bradford Investment Management!! This is an edited re-post from a prior blog.

Type "investing memes" into Google and voila, there we are on page 1!

If we can explain memes, imagine what other complicated financial matters we can help explain and solve!

We also do pretty well on Google for more serious searches. If you search for a "Nashua investment manager", there we are! Yeah us!

The effort that businesses of all sizes put into Search Engine Optimization to get onto page 1 of Google and Yahoo search results is enormous and we're really proud our content is resonating.

So, we've added some new investing memes, and new explanations, because really, investing memes can get a chuckle out of accountants and financial advisors, but the rest of you are probably just shaking your collective heads...

Let's start with one of the originals...

Now, as an investment advisor AND a Star Wars fan, I find this pretty darn funny.

But I suspect many people don't get the full reference. Most people probably do remember the famous scene in Return of the Jedi where Admiral Ackbar leads his troops into the Emperor's trap as Luke watches from the deck of the Imperial Star Destroyer with his father in the background. When the Admiral discovers their surprise attack is not a surprise, he utters the famous line "It's a trap!"

But what the heck is EBITA and why is this funny?

EBITDA is an accounting term that stands for Earnings Before Interest, Tax, Depreciation and Amortization. Which is a fancy way of saying revenue minus operating expenses. It's a figure that many believe represents the core profits of a company, a true figure of profitability. Revenue minus basic expenses, it's simple and elegant. There are no adjustments (or some may say manipulations) that can come into the EBITDA.

And that’s the trap. It seems like because those possible manipulations and adjustments are EXCLUDED, we are lulled into using EBITDA as a virtuous measure of profitability. In many cases, yes, that’s true, but there are still many ways EBITDA can be manipulated that financial analysts need to consider. As analysts, we know that, but those that don’t, fall into the trap...


Here’s another one:

I chuckle here too.

This refers to the quest all investors and investment professionals are on to determine when a stock, stock market index or other investment is at the very lowest point in its valuation cycle. In some cases, the bottom or the lowest price of a stock is the price you’d like to buy the investment if you think it will subsequently rise in price. Finding that price is very elusive and even with highly sophisticated tools and analytics, the best investment analysts are often wrong.

This meme is funny because we know how hard it is to analyze and determine when a stock or index has hit bottom and we all likely regret times we’ve been wrong trying to time the market.

In most cases, investors are better off not trying to time the market. The most prudent strategy is often pursuing an approach of dollar cost averaging and holding a diversified portfolio that is periodically rebalanced.


If we're going to hit Star Wars, we should hit Star Trek too...

Value investing generally refers to buying stocks that are currently out of favor in the market, hoping and predicting that they will rebound. We've all heard the saying, "buy low, sell high". But much like calling the bottom, determining when a stock is truly a value and when it's on a permanent downward slide is difficult. This is why value investing can at times look very much like the scenario described and the people doing it without skill, well, the meme is spot on.


Finally, we have our obligatory investing meme with a pet. This one’s a little more straightforward. I’m of to a tennis lesson myself right now, we'll see how my rate of return compares to Fido.

Do you need something explained? We'd love to chat, answer questions or discuss any financial matters or topics in this post.

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