The secret language of Wall Street is revealed

Quickly say these five words out loud: bifurcation, backward, ZIRP, NIRP, Contango.

Did you do that?

If so, did you sound like a cheerleader chanting some foreign language?

These are the real words used by many traders, gurus and Wall Street promoters.

They may seem ridiculous or confusing, but serve several purposes. (1) They disclose or describe certain market conditions. (2) They act as “signals” for trading purposes. (3) They are designed to confuse and / or impress you.

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

Interestingly, most people (including me) aren’t impressed by words that don’t make sense.

However, if you have a basic understanding of them, you will be better prepared as an investor and more likely to be ahead of the crowd. Think of it as learning how to “connect the dots” of a financial puzzle.

Compare this to trying to do business in a foreign language (German, French, Japanese, Greek, etc.). If you don’t understand the language, you will most likely lose money … A LOT.

So, like learning any language, you need a good teacher or translator who will make it simple and easy to understand.

That’s where we enter.

In this article, we’ll give a few words so 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. This is an abbreviation for “Zero Interest Rate Policy”.

It was initiated after the collapse in 2008 to “allegedly” stimulate the economy. The truth is that ZIRP has caused critical damage to most retirement plans. (They need interest rates to be high so they can fund their plans for their retirees.) The ZIRP has also crippled most senior citizens who depend on interest on their investments to live.

Although rates are rising slowly, it will take a long time to repair the damage done by ZIRP.

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

This is a more collateral damage from the collapse in 2008 and has operated mainly in European countries.

Here’s the crazy part. If a country’s government bonds have negative interest rates (currently -0.05% to -0.36% or higher), investors should PAY THEM to save their money.

For an investor, this is a losing proposition, and it’s hard to imagine anyone buying bonds with negative rates, but millions have been sold.

We’ve only scratched the surface, but hopefully you can see how these abbreviations are very confusing and misleading.