Balance sheet – this is the sheet you see underneath the high-wire act at the circus. The idea is, you, the investor, are on a high-wire (pretend you’re wearing those funny tights) and at any time might fall fifty or one hundred feet (that is, your stock drops fifty or one hundred points) and get “killed,” luckily someone (your financial planner) is always there with a very flimsy sheet to catch you if you lose your balance and fall.
Common stock – this has to do with your ancestry and because it’s not aristocratic why you keep getting stuck with low-paying menial jobs. Essentially, your stock (bloodline) is common and that’s why you are where you are and things will probably not change no matter what happens.
Accrual accounting – this is actually an Old English (see OE) spelling of the modern word “cruel,” as in wicked stepmother, but if it were spelled that way, you, the investor, would most likely get suspicious and think something was up (it always is, incidentally, except when it comes to your portfolio which is down more than it is up), and with your hard-earned money at stake, you’d want to put it where it would be safe, like the nose of a horse, for example.
Cash flow – the principle behind cash flow, if understood by the investor, will demonstrate once and for all why you never did, nor ever will, have enough money. Cash, like any liquid (see liquidity) especially water, always flows away from one thing toward something else. Thus a principle at work in nature can illustrate for the investor how to accumulate cash. You can’t. Even if you were to live downstream, it would still flow away from you and into some polluted river. If you say I’ll build a damn, that still wouldn’t work because eventually it would burst and all your money would flow onto the next guy’s property where it would stay and he’d prosper because he’s not you.
Dividend – the key part of this word is “end,” as most likely any dividend you currently receive will soon end because you will need to liquidate (see liquidity) your portfolio in order to a) eat; b ) fill your car’s gas tank; c) buy lottery tickets.
Equity – although this word dates back to ancient times, its positive meaning changed with the advent of mortgages and took on negative, some might say sinister, meaning. Briefly, equity is what you currently don’t own, but may own sometime in the future, provided 1) you actually have a future and 2) you get there before someone catches on that you may own something in the future and they want it now.
Fiscal year – this is a movement by anarchists to change the calendar the human race has been using since the time of Caesar. No one knows if fiscal is really a word, because it sounds made up, and most people think it should really be pronounced physical, which would probably make more sense.
Liquidity – this is the opposite of illiquidity, so if you aren’t sure what liquidity means, try to think of its opposite and work backwards. Keep in mind, liquid in financial circles is not so different from liquid in any other circles; in fact if you’re going in circles, you’re probably onto something. Remember, if your assets are frozen, they’re no longer liquid and must be thawed at room temperature for at least 24 hours.
NASDAQ – these are the initials of the original Bowery Boys: Neil, Andy, Seth, Doobie, Arnold, and Quinn.
Net worth – if you play tennis you know the net is worth about $18 dollars, but its greater value is in the way it separates the players and can be hit with a ball traveling at the speed of light without tearing. No discussion of net worth is complete without a discussion of liabilities. Except here.
Tax shelter – this is a room eight miles below ground where the IRS works, so in the event of a nuclear holocaust the government can still send out tax due notices.