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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GO-ANYWHERE FUND, n.  A mutual fund, specializing in stocks or a wider range of assets, that has no limits on the number of ways in which it can provide disappointing results to its investors. (See also UNCONSTRAINED BOND FUND.)


GOLD, n.  What people think they will make piles of when they buy a shiny yellow metal that is, in fact, useful primarily for melting into cufflinks and charm bracelets.


GOLDBUG, n.  Someone who thinks everything will make the price of gold go up — someday.


GOLDEN PARACHUTE, n.  Although gold is extremely heavy, a parachute made of this substance nonetheless assures the wearer of a light and comfortable landing even when flung in disgrace from the commanding heights of corporate headquarters. A CEO bailing out of the company with a golden parachute may be awarded hundreds of millions of dollars by the board of directors, mainly to express the board’s gratitude that he is finally leaving and that the money they have to spend to get rid of him comes from the shareholders rather than out of their own pockets.


GREATER-FOOL THEORY, n.  The belief that, no matter how foolish a price you pay for a stock or other asset, you can always find a greater fool who will pay more to buy it from you. Why bother figuring out what a stock is worth, when you can simply gamble that somebody else will think it’s worth even more?

The term has been traced back to the 1960s, although the hope of always being able to sell to someone even more reckless than you are is almost certainly as old as financial markets themselves.

It might seem surprising that there could ever be a shortage of fools in this world, but if you count on always finding one just when you need him most, you will wake up one day to find that everyone else has suddenly smartened up and that the greater fool is you.



GROSS SPREAD, n.  The proportion of the total proceeds of a securities underwriting that is earned as fees by the investment banks that managed the offering — often a spread that is gross indeed.

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