The Devil's Financial Dictionary

This glossary of financial terms is inspired by Ambrose Bierce’s masterpiece The Devil’s Dictionary, which the great American satirist published sporadically between 1881 and 1906. (View free versions of Bierce’s text here or here.) Like Bierce’s brilliantly cynical definitions, the explanations presented here should not — quite — be taken as literally true. Some of these entries are adapted from articles published previously in Financial History, Money, and The Wall Street Journal.

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FEE, n.  A tiny word with a teeny sound, which nevertheless is the single biggest determinant of success or failure for most investors. Investors who keep fees as low as possible will, on average, earn the highest possible returns. The opposite may be true for their financial advisors, although that is still not widely understood.

As the popular financial journalist M.T. Head recently wrote:

“We think 1% a year is a very reasonable fee, given how hard we work for our clients,” said wealth manager Bill Muchmore of Adenauer Doe & Co. Asked why the sound of waves breaking on a beachfront seemed to be audible in the background during our conversation, Mr. Muchmore hastened to explain that he was walking back to his office from lunch and several city buses had just passed by him.


FIDUCIARY DUTY, n.  The obligation of a financial adviser to provide advice that is solely in the best interests of his clients. If brokers became subject to a fiduciary duty, according to top executives at many brokerage firms, that would deprive less-wealthy investors of the ability to obtain any advice at all. That, according to the brokerage industry, would force these investors to make their own decisions for free rather than paying a broker a high price to put his own interests ahead of their own. Leaders in the brokerage industry say that would leave these investors much worse off. If you don’t find that at least slightly confusing, then you haven’t been paying attention.


FIXED INCOME, n.  Income that is fixed to vary just when the investor least expects it to.


FLIGHT TO SAFETY, n.  A movement among investors en masse to dump the risky securities they have recently bought and to replace them with safer assets like U.S. Treasury debt. A flight to safety typically occurs almost immediately after a flight of fancy, during which investors had deluded themselves into thinking that risk had been repealed.


FORTUNE, n.  Wealth; also, luck.

Both meanings derive from Fortuna, the capricious and unappeasable Roman goddess of change. For most of the past two millennia, the two meanings weren’t merely interchangeable; they were one and the same. Wealth was understood to be largely the result of luck, and luck was the substrate of wealth. As a result, money was regarded as ephemeral. Your fortune was effectively on loan to you from the goddess Fortuna, who could call her property back from you at any time and without warning. The Wheel of Fortune was indistinguishable from the Circle of Life.

The historian Howard Rollin Patch described the ancient goddess Fortuna as “the great power that rolls through all things, or at least that rolls all things.” She spun a wheel and often stood on a sphere, ball, or bubble, symbolizing her own precarious balance. The great Latin poet Ovid wrote of “the power of Fortune’s precarious wheel” and described the wandering goddess as:

changeable, with uncertain footsteps,
never remaining sure, nor fixed in the same place,
now bringing happiness, now showing a bitter face,
and only true in her inconstancy.

Even as they described Fortuna as fickle and arbitrary, the Romans also taunted her. “If we were prudent, you’d possess no power, Fortune,” wrote the poet Juvenal; “it’s we who make you a goddess, and grant you a place in the sky.”

Each person’s life, luck, and wealth thus took on the character of an eternal tug of war with Fortune, who would whip her wheel around on a whim, hurling people from the top to the bottom and back again whenever she was bored or angry. The mortals, in turn, mocked and insulted her, as if they could browbeat her into refraining from another devastating spin of her wheel.

In the Middle Ages, Fortune was commonly portrayed alongside (or at the hub of) a wheel that she spun one quarter-turn at time, counter-clockwise toward the left (sinistra in Latin), symbolizing the evil turn that her judgments of individuals often took. She was often shown blindfolded and sometimes with her ears covered as well, to indicate that she was blind to favoritism and deaf to entreaties for mercy. Her sway over human fate was personified by the figure of a king who attempted to cling to the wheel as she cranked it. The king typically called out “I will reign” from the ascending side of the wheel, “I reign” at the top, “I have reigned” on the way down, and “I have no reign” at the bottom. Our modern idiom “to come full circle” is almost certainly a vestige of this ancient idea.

Christine de Pizan, "The Book of the Queen," ca. 1410-1414; British Library, Harley MS 4431, f129r

Christine de Pizan, “The Book of the Queen,” ca. 1410-1414; British Library, Harley MS 4431, f129r

Fortune wasn’t just cold, fickle, and unfair; she was frightening. Medieval plays and pageants sometimes featured a giant mechanical wooden wheel of fortune that dominated the stage. In these dramas, Fortune was characterized as a sadistic flirt, singing sweetly to the king atop the wheel and crowning him with jewels; then, just as the king was preening and congratulating himself on his ascent, she would yank off her veil to reveal her terrifyingly ugly face, scream insults at him, and topple him with another turn of the wheel.

Carmina Burana, the choral cantata composed by Carl Orff in 1935, is based on a compendium of Latin lyrics collected in Bavaria around 1230. Orff’s orchestration of the stark Song 17 strikes terror into the heart of the listener:

O Fortuna,
     O Fortuna,
velut luna
     like the moon,
statu variabilis,
     always changing,
semper crescis
     ever waxing,
aut decrescis,
     then waning —
vita detestabilis
     detestable life —
nunc obdurat
     now harshly,
et tunc curat
     and then softly,
ludo mentis aciem,
     toying with the mind,
     and power
dissolvit ut glaciem….
     together melting like ice….
Fortuna, from the Carmina Burana codex, ca. 1230

Fortuna, from the Carmina Burana codex, ca. 1230

In one of the most indelible scenes in Dante’s Inferno, the poet shows misers and spendthrifts forming a wheel of fortune with their own bodies, turning back and forth throughout eternity:

Qui vidi gente più ch’altrove troppa,
     Here I saw many more people than anywhere else,
e d’una parte e d’altra, con grand’urli,
     and from one end to the other, with great heaves,
voltando pesi per forza di poppa.
     they rolled boulders by pushing them with their breasts.
Percoteansi incontro; e poscia pur li
     They kept going until they crashed into each other,
si rivolgea ciascun, voltando a retro,
     then turned around and rolled the weight back again,
gridando: ‘Perchè tieni?’ e ‘Perchè burli?’
     hollering ‘Why save?’ and ‘Why spend?’
Cosi tornavan per lo cerchio tetro
     Like this they revolved in a terrible circle
da ogni mano all’opposito punto,
     from one end back to the opposite side,
gridandosi anche loro ontoso metro;
     hollering again their mocking chorus;
poi si volgea ciacsun, quand’era giunto,
     then, having reached the other end,
per lo suo mezzo cerchio all’altra giostra.
     each rolled back in his half-circle to the other jousting post.

In Dante’s vision, the human race — greedy and miserly by turns — has so internalized the ephemeral nature of Fortune that the goddess no longer needs to turn the wheel. In the pursuit of wealth, people have become the wheel.

Virgil, Dante’s guide through Hell, explains the scene to him:

Or puoi veder, figliuol, la corta buffa
     Now you can see, my son, the clipped farce
de’ ben che son commessi alla Fortuna,
     of the wealth that is committed to Fortune,
per che l’umana gente si rabuffa;
     for which people make fools of themselves;
Chè tutto l’oro ch’ è sotto la luna
     For all the gold that is beneath the moon,
E che già fu, di quest’anime stanche
     and ever has been, could not deliver peace
Non poterebbe farne posare una.
     to one of these wasted souls.

Finally, Virgil explains to Dante that Fortune is neither good nor evil, but merely an agent of God, fulfilling His wishes by dispensing justice and destroying hubris. Swiftly and unceasingly, she takes wealth from the rich, hands it to the poor, lifts the lowly and humbles the powerful, “like a snake in the grass.”

In the earliest usages of the word in English, around 1300, fortune meant chance, happenstance, luck. It wasn’t commonly used to refer to a person’s total wealth until nearly three centuries later. From the late 1400s to the mid-1600s, it was even used to describe a disaster; to “run a fortune” was to run the risk of failure. The word misfortune did not arise until at least the mid-15th century, presumably because it was taken for granted in those times that good luck was just bad luck that hadn’t happened yet.

Shakespeare used the word fortune variously to mean fate, news, victory, accident, luck, or wealth — most often, luck. But the old image of Fortune capriciously spinning her wheel, and humans taunting her over her unfairness, persisted. Shakespeare’s characters call her a “housewife” (pronounced like hussy), a “strumpet,” a “whore.” As Cleopatra says to the dying Mark Antony:

No, let me speak; and let me rail so high,
That the false housewife Fortune break her wheel,
Provoked by my offence.

Antony and Cleopatra, IV: 15

And Celia says to Rosalind:

Let us sit and mock the good housewife Fortune from her wheel, that her gifts may henceforth be bestowed equally.

As You Like It, I: 2

The bombastic Welsh soldier Fluellen describes Fortune in Henry V:

Fortune is painted blind, with a muffler afore her eyes, to signify to you that Fortune is blind; and she is painted also with a wheel, to signify to you, which is the moral of it, that she is turning, and inconstant, and mutability, and variation: and her foot, look you, is fixed upon a spherical stone, which rolls, and rolls, and rolls: in good truth, the poet makes an excellent description of it: Fortune is an excellent moral.

— Henry V, III: 6.

People often spoke of “having” a fortune, but to “make” a fortune didn’t appear in English until the early 17th century and wasn’t a common expression until well into the 18th century. Dr. Samuel Johnson, in his great Dictionary of the English Language, defined fortune first as “the power supposed to distribute the lots of life according to her own humour”; he didn’t get to its meaning of wealth until his fifth definition.

Only once the Enlightenment began to exalt the power of the individual mind did it seem feasible for people to “make” their own fortune rather than merely having it on loan from a fickle goddess. Even as late as 1835, you can hear the echoes of Fortuna in the words of Nathan Mayer Rothschild, then the world’s most powerful financier: “It requires a great deal of boldness and a great deal of caution to make a great fortune; and when you have got it, it requires ten times as much wit to keep it.”

Something was gained and something was lost in the Industrial Revolution, when people finally outgrew the ancient belief that luck and wealth were one and the same: Entrepreneurship became possible, and hubris became an epidemic. As almost everyone came to believe that he or she could make a fortune, it became increasingly difficult to remember that making and keeping wealth is impossible without luck.

Investors who forget this lesson so deeply rooted in the historical meaning of the word fortune will have to learn it for themselves. They are most likely to learn how ephemeral fortune can be, and how much it depends upon luck, just as they are most convinced that it is permanent and that they derived it from their own skill.




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