Today, we continue exploring the hoax of modern finance with a detailed look into the terminology and indicators commonly used in modern finance. Then, we’ll address how noise can be used by financial institutions to confuse the public and obscure their true intentions.
Most people, including those with a strong background in financial affairs, are likely to be overwhelmed when they hear the financial terminology used in day-to-day operation of the markets. Some of the most misunderstood terms include “indices,” “options,” “funds,” “ETFs,” “forward contracts,” “debt instruments,” and “trading positions.” These are all terms of art that describe a variety of financial instruments and how they can be used in different contexts.
Indicators are another commonly misunderstood concept. These refer to measurable entities that are meant to provide an indication of the performance of a particular stock or asset. The most common indicators are “yields,” “price-to-earnings ratio,” and “beta.” Yields refer to the interest rate or dividend rate paid on a particular stock or bond. The price-to-earnings ratio is a tool used to evaluate the fundamental performance of a stock; it isolates the potential gains of an investment by comparing its price to the annual earnings of a particular company. Beta gauges the volatility of a stock compared to a broader market index.
Noise is another concern of modern finance. This refers to a type of manipulation used by the financial institutions to confuse the public and obscure their true intentions. Financial institutions will often engage in trading activities, create large pools of investment capital, and spread noise in order to make it difficult for others to track and analyze their movements. This allows them to take advantage of unsuspecting investors or to manipulate markets for their own personal gain.
Understanding the hoax of modern finance requires careful study and dedication, as the vernacular, indicators, and noise are all essential elements of the process. By educating yourself on the terminology, indicators, and noise employed by the financiers, you can better equip yourself to navigate the tricky world of market investing.
