Wallstreet is crazy!

Lukkha kartik dasa told me about the Skirt Length Theory. Since I am more lukkha :D, I browsed through the financial dictionary on investopedia and believe it or not! these weirdo terms are actually used in finance.

Skirt Length Theory:

Skirt lengths are a predictor of the stock market direction. According to the theory, if skirts are short, it means the markets are going up. And if skirt are long, it means the markets are heading down. The idea behind this theory is that shorter skirts tend to appear in times when general consumer confidence and excitement is high, meaning the markets are bullish. In contrast, the theory says long skirts are worn more in times of fear and general gloom, indicating that things are bearish. Although some investors may secretly believe in such a theory, serious analysts and investors - instead of examining skirt length to make investment decisions - insist on focusing on market fundamentals and data.
(If you see girls in mini-skirts around, just start investing :P)

Jennifer Lopez:
A technical analysis term referring to a rounding bottom in a stock's price pattern. For those unaware, Ms. Lopez is often criticized (or praised) for her round bottom. Traders like the rounding bottom in a stock pattern because it can be an indication of a positive market reversal, meaning expectations are gradually shifting from bearish to bullish.

Leading Lipstick Indicator:
An indicator based on the theory that a consumer turns to less-expensive indulgences, such as lipstick, when she (or he) feels less than confident about the future. Therefore, lipstick sales tend to increase during times of economic uncertainty or a recession. Believe it or not, the indicator has been quite a reliable signal of consumer attitudes over the years. For example, in the months following the Sept 11 terrorist attacks, lipstick sales doubled.

Boiler Room:
A place where high-pressure salespeople use banks of telephones to call lists of potential investors (known as a "sucker lists") in order to peddle speculative, even fraudulent, securities. A boiler room is called as such because of the high-pressure selling. A broker using boiler-room tactics gives customers only positive information about the stock and discourages them from doing any outside research. Boiler-room salespeople typically use catchphrases like "it's a sure thing" or "opportunities like this happen once in a lifetime". Boiler-room methods, if not illegal, clearly violate the National Association of Securities Dealers' (NASD) rules of fair practice. The North American Securities Administrators Association estimates that investors lose $10 billion a year - roughly $1 million an hour - to investment fraud promoted over the telephone!!

Naked Position:
A securities position that is not hedged from market risk. If an investor simply holds 500 shares of Ford, he or she has a naked position in Ford. If the investor wanted to cover this position, he or she could buy put option contracts, which would help protect against downward movements in the price of Ford shares.

Fat Cat:
Used to describe executives who earn what many believe to be unreasonably high salaries and bonuses. These top executives also receive generous pensions and retirement packages, consisting of extra compensation not available to other company employees. This term conjures up the image of cats that consume more than an appropriate amount of food and become grossly overweight. A real-life example of a fat cat would be former Disney CEO, Michael Eisner. For a period of five years in the late 1990s, Eisner received over $737 million in compensation, despite the fact that the company's five-year net income shrank an average of 3.1% each year.

Buy, Strip and Flip:
A type of situation that involves private equity firms buying out a target firm (usually with a leveraged buyout) and then, within a year or some other relatively short period of time, effectively selling the target firm in an IPO.

Plain Vanilla:
A plain vanilla option is the standard type of option, one with a simple expiration date and strike price and no additional features.