Wednesday, 12 May 2010


A Wordista is one of the business worker archetypes. He (for it is usually a he) is the person in the office least in love with technology, and therefore least given to embrace it. Wordistas get away with as little technology as possible and restrict themselves, wherever possible, to Microsoft Outlook and Microsoft Word, preferably accessed by means of a dictaphone or, even better, a minute secretary.

Wordistas are likely to struggle with the simpler technological tasks, and may be identified by telltale forensic evidence around their workstations: a dictaphone, a quill, Tipex, almanacs, gazettes and so on. Wordistas can be heard to wonder and marvel at the "forward" and "back" buttons on Internet Explorer when shown them by co-workers. They would have no idea what Chrome even was.

A Wordista is thus usually a lawyer, wears a jacket and tie at all times (including weekends), and tends to lament the passing of outmoded technologies, conventions and means (and modes) of communication. Such as the fax. Wordistas are by disposition anal, enjoy arguing the toss about issues of no significance, employ needlessly verbose expressions and, thanks to this cluster of tendencies, are responsible for more than their fair share of anal paradoxes.

Wordistas in one form another form most of the world's population. They are a silent majority - the planet's plodders, resentful in particular of middle managers who through dexterous use of technology like Microsoft PowerPoint and a facility for obfuscation and confusion, advance themselves more deftly through the organisational ecosystem. Wordistas see middle managers for what they are: the cuckoos of the business world.

Therefore, notwithstanding Microsoft Word's extreme cleverness and its brilliant functionality and integration, it is used by most of the world as a glorified typewriter, where even use of paragraph formatting passes for sophistication.

A proper Wordista relies to an extraordinary degree on a good secretary for clerical support, personal organisation and frequently nutritional sustenance and help with basic bodily functions. Supremely loyal to her principal, a Wordista's secretary has no more interest in, or use for, the functionality embedded in word than does her principal and will eschew (mostly through studied ignorance) facilities such as auto-numbering and page breaks, preferring to hammer away repeatedly on the carriage return and or spacebar for any "clever" formatting.

Monday, 10 May 2010

Anal paradox

The anal paradox is a documentation drafting theory that purports to explain the tendency of legal documents to get longer and longer through time, whilst their comprehensibility inevitably decreases.
Briefly stated, the theory claims that however anal it may be to add qualifications, clarifications, for-the-avoidance-of-doubts, without limitations or other pointless legal expressions, once these comments have been added by an anal lawyer during the course of a contractual negotiation, it widely considered even more anal for an opposing lawyer to remove them again, seeing as they make little or no difference to the legal or economic substance of the agreement, and as such "do no harm".


A peculiar feature of much management speak is that, rather than clarifying and simplifying language (and thereby, presumably, enhancing the management process) the language of management speak actually complicates it. Anti-abbreviations, which often manifest themselves in buzzwords, are a core part of this process. Americans are fond of anti-abbreviation, as it tends to make mundane things sound more important, which is why a tank (British) became an "armored personnel unit" (American).
Their evolution in this language is seen as being analogous to biological evolution of the peacock's tail: it is so detrimental to the functioning of the peacock in every practical sense that it serves only to illustrate just how fit the peacock is for survival. Sort of a "look at me, look at me, I have this ridiculous tail dragging behind me and I'm still cock of the walk".
Another frequent source of anti-abbreviation is legal profession, assisted by the strange anomaly-cum-curse that lawyers live under, the anal paradox.

Geek Paradox

The Geek Paradox, which has been described as "a biological anomaly which reverses the established natural order of all things", "an abomination before God who created all things bright and beautiful" and "cogent evidence that there is a God after all, and that he is largely as described in the New Testament, since the meek seem finally to be inheriting the Earth", is a theorem deriving from observations made largely in investment bank habitats and those Silicon Valley coffee emporias beloved of venture capitalists that, in finance at any rate, the small, scrawny guy with the questionable sense of humour and the unusual fixation on maths and computers gets the girl, the condo, the Lear Jet and the collection of Maseratis.
Elsewhere, this has come as something of a let-down. Everything we were taught in school led us to believe that the strong silent types who were incredibly popular, handsome, captained the first XV, led mountaineering expeditions to K2, sang baritone in the Chapel Choir, won the inter-house Tae Kwon Do competition and relentlessly victimised the unfortunate weedy kids who hung out in the computer lab toting 7" floppies with hacked copies of Castle Wolfenstein, misappropriating their lunch money, were the ones in life destined to win, have glamorous wives, beautiful children, and swan about in late-model race-tuned BMW roadsters.
But no: a glance around a trading floor tells quite a different story. Losing a bit of pocket money in one's teens transpires to be quite the formative experience, it seems.

The Farmer and the Sheep

A parable for our modern times.
A stock agent visited a huge sheep station in New Zealand's high country. Looking over the huge expanse of the Hakataramea Valley, filled with sheep grazing and wandering to and fro, the stock agent shrugged and said, "I can't give you a price unless I know how many sheep there are in your flock."
The farmer stood quite still, and stared down the valley. After about a minute he turned to the agent. "Eight thousand, four hundred and twenty six".
"How on earth did you manage that?" gasped the stunned stock agent.
"Easy. I counted all the legs and divided by four."


Defender was an early arcade video game, of the generation after the original space invaders, which involved being a pilot in a small star fighter flying over a planet trying to rescue little sticky things and avoiding a host of more or less aggressive beasty things which are trying to kill you. One has a number of tools at ones disposal, including a laser cannon that makes an impressive sound and fires a stream of annihilation (far more satisfying than the little pellets emitted in space invaders), a limited supply of smart bombs which blow up all bad guys on the screen but don't harm the good guys, and the ability to randomly jump into hyperspace if things were getting really tricky (a move of last resort, as you have no idea how sticky the place would be where you wound up)
As such Defender was, and remains, one of the best sources of neat metaphors for the vicissitudes of life (but is still not as good on that score as cricket).


Cricket is a game with no practical interest or utility save as a metaphor for our grim, tenuous grip on life on this planet, in all its forms and with all its varieties.
People who don't understand the metaphorical power of cricket (and there are plenty of them), or who view it simply as game played between spells of rain over a period of weeks by people wearing old fashioned tennis gear are prone to writing it off as utterly pointless, long-winded and boring.
"Ahh," says the cricket connoisseur, well-practiced in cynical ruminations on the meaning of his own existence, "but isn't that exactly the point!"
Cricket is therefore always a rich and handy source of metaphors in business life, some of which have made it to buzzword status and some, sadly, to the less august level of mere clichés. Those ones you simply have to play with a straight bat.

Sunday, 9 May 2010


Buzzwords are pet words and phrases, beloved of their employers, resented by everyone else. A significant cause of Management Speak, unchecked (and possibly unwittingly exacerbated) by the best efforts of campaigners such as the Financial Times' Lucy Kellaway to stamp them out.

Buzzwords come in various forms:
Technical buzzwords, while often entirely well-intentioned, are basically meant to make what you do sound hard. They are usually expressions which have no meaning outside the rarified heights of a given profession or calling, and little inside it. Latinisms, commonly found in legal documents, are a good example. Some achieve greatness by ubiquity: mutatis mutandis is employed with uncommon regularity in any contract or letter despite most lawyers having little conception what it means (which turns out to be not so bad, as it doesn't really mean anything). Indeed, Latinisms abound: ceteris paribus, ipso facto, inter alia, prima facie and so on, and provide joy only to those who aren't confident that their own language is capable of expressing concepts of general application. Tiring and pretentious.
"Hip" buzzwords (the inverted commas are important) are phrases that are meant to make what you do sound cool. Well, it's almost too ridiculous for words, isn't it. Would that it were so. But we all know it is true. "Hip" buzzwords are the most commonly encountered and heavily resented forms of buzzword. Because of their inherently transitory nature they tend to be auxiliary buzzwords but some of the more redoubtable examples have made it to core buzzword status.
Some examples:
  • "To drill down".
  • "To circle the wagons".
  • "To sing from the same hymn sheet".
  • "blue sky thinking".
  • "To cut to the chase".
  • Any sporting reference, eg, "we are approaching the end zone", or "who is going to quarterback the hiring process?"

We all do it, or spend a long and bitter career nursing resentful thoughts about undeserved underachievement. It is difficult to expound the common theme which runs through the coinage of successful buzzwordery of this category, but it seems to involve metaphors which invoke the exotic, the romantic, or the masculine (for example the examples cited above call up images of oil prospecting, the wild west and, um, going to church) since, as we all know, the practice of law and finance is perhaps the most dry and emasculating pursuit ever devised, which is why people get paid so much to do it. (It plays into the hands of the preternaturally emasculated, of course, which in turn leads to the Geek Paradox but that is a different story).
Phrases that are meant to be funny: Such as "career-limiting behaviour". What these really demonstrate is how little importance is placed on a developed sense of humour in the financial markets.

The is some convergence of buzzwords across otherwise unrelated disciplines, which suggests some buzzwords have a memetic or evolutionary power which can't be explained purely in terms of the buzzword paradox: For example, almost every sport, no matter how obscure (curling, mountain biking, jetboat racing) or lacking in actual skill or the expenditure of energy (luge riding, ten-pin bowling) as well as your common or garden sports like football and tennis, has devised expressions like "deep", "short", "long", "backhand", "inside", "outside" and "short backward square".

There are advantages and, of course, pitfalls of heavily using buzzwords.

Firstly,the continued prevalence of buzzword can be (only) explained by the strong career-evolutionary advantages they offer to a sophisticated user. Their skilful deployment can at the same time impress, delight, bamboozle and intimidate different sectors of the same audience in a way which is of uniform
 benefit to the speaker, and in this way operate rather like smart bombs in the old video game Defender; accruing maximum points and clearing out all dangerous objects in a single stroke. 
On the other hand, there is a risk of inadvertent double entendre: At the same time, used carelessly or with insufficient acumen they can prove career limiting, embarrassing and lame. A buzzword is a form of dead (or at least terminally ill) metaphor, and involves assigning a novel meaning to a word or phrase in conventional use in another (usually more exotic) context. As such, buzzwords share many characteristics with double entendres, which also involve assigning a novel (naughty) meaning to a commonly used phrase. Many of the contexts from which buzzwords are appropriated are specifically masculine endeavours, and this raises the risk of inadvertent double entendre. One needs to be careful, for example, into what (and especially whom) one offers to drill down.
There are also hidden dangers in using Compound Buzzwords which, if not carefully managed, may lead to embarrassingly mixed metaphors.

Buzzword Bingo

Buzzword Bingo is a much talked about, seldom seen, parlour game allegedly played by disenchanted participants on conference calls and in business meetings, the object of which is to humiliate the person most egregiously using buzzwords, by standing up and shouting "BINGO!" at a point (usually not defined) when this behaviour is considered to have gone on long enough, the implication being, of course, that you have a "card" marked with buzzwords, and the speaker has used all of them.
Of course, Buzzword Bingo never really gets played, because everyone knows that to get on in this world you have to use Buzzwords; the more you use the better (ceteris paribus) you'll get on, and therefore the less prudent it is for others (who, in order to be playing, one must assume, will use fewer buzzwords and ipso facto will be further down the food chain) to make fun of you. Because that would be career-limiting behaviour. 
This observation is part of the Buzzword Paradox, advanced to explain the ongoing prevalance of ridiculous figurative language in the financial markets.

The lost tribes of Microsoft Office

There is a branch of software anthropology which categorises office workers by reference to the Microsoft application through which they understand the world. This provides a fascinating application of Kuhnian paradigm (and Darwinian) theory to office life and software usage.
The theory goes that different individuals, doing different roles, become familiar with - and develop an early dependency on - a different "host" application. For example:
  • a legal clerk will mostly use Microsoft Word or Outlook.
  • a financial structurer or trader will mostly use Microsoft Excel.
  • a salesperson or a middle manager will learn their trade through the prism of Microsoft PowerPoint.

In a relatively short time, this inclination will develop into a full-blown dependency, to the point where the host application plays an active formative role in the worker's intellectual and technical development. As such the dependency will become increasingly hard to de-program (though there are generally accepted methods of doing this) and, in a broader timescale, the worker's thus-formulated needs will formative in the ongoing development of the application: a positive feedback loop of epic proportions).
As a result workers of the different persuasions (or "tribes") will adapt their own "host" applications in extraordinary ways to do their bidding - an Excel wizard will somehow contort a spreadsheet until it functions as a word processor, or a flow diagram generator. Powerpoint experts will communicate with a different vocabulary altogether, and will tend to see almost everything in the world in terms of a Gantt chart.
Needless to say, interesting situations develop when hotly loyal tribal members then interact.


Microsoft PowerPoint is the market standard software package on which seminar presentations are generated. (a presentation, or "deck", is a particular form of animated document generated in PowerPoint and inflicted on powerless underlings which promises much and delivers little, especially in the hands of a gifted speaker of management speak.)
But you knew that already. More interesting is PowerPoint's central role in the linguistic development of management speak. PowerPoint is, for example, almost solely responsible for development in management speak of a character set comprises not just the traditional Roman alphabet used in Indo-European languages but also the lexicon of wingdings, pull-outs, bullets and animated transitions available in management speak-compatible (and enabling) applications like PowerPoint. This makes management speak sort of like base sixteen to ordinary English's decimal; an illegitimate off-spring of the Indo-European linguistic tradition and the first genuinely new dialect to emerge since the development of Latin five thousand years ago.
Adeptness at PowerPoint, the willingness to tinker around to get snappy slide transitions and the like, is a core skill of an aspiring middle manager (and a quick way to pick up the fundamental syntax of management speak). Those having a black belt in PowerPoint form one of the classic business worker archetypes - the lost tribes of Microsoft Office. 
PowerPoint experts themselves fall into two clans: salespeople on one hand, and middle managers on the other. Their respective uses of PowerPoint are markedly different (though in both cases the chief objective is to obfuscate: Salespeople use PowerPoint to sell things; middle managers use PowerPoint to overwhelm, confuse, distract or otherwise simply justify their own existence. 

Microsoft Word

Microsoft word is the "home application" for those billions of people in the world who don't really like software applications but are forced, by the need to put food on the table, to use them. Microsoft Word is therefore the personification of a necessary evil, and in the business world its adherents make up the smallest of the lost tribes of Microsoft. 
A paradox associated with Microsoft Word is that, no matter how clever it becomes, (and these days it's pretty clever - I mean, they've even got the auto-numbering to work) 80% of the people who use it aren't up to anything smarter than changing the font size, so its functionality goes untouched. These are the same people who hit the return key fifty times to get to a new page, would consider entering a manual page break to be incredibly smart and can't even conceive of the idea that you could build a page break into a paragraph style, largely because they can't conceive of the idea of a "paragraph style" at all.
In the business world, the sorts of people who belong to the "Microsoft word" tribe tend to reside in the legal department. They would never use Excel, even if their lives depended on it, and are innately (and correctly) suspicious of anyone bearing a PowerPoint presentation, and anything contained in it. 


As all portfolio managers who have ever bought an apartment know, in the immortal words of Candadian songstress Suzanne Luca:
My name is Vega
I live on the second floor
I lives upstairs from you
Yes I think I've seen you before
Vega is, technically, "the rate of change in volatility of an option", meaning the greater the volatility the more vega you have. Volatility is affected by a number of things, but most commonly by leverage - or borrowing money from the bank to make more of a speculative investment than you can actually afford. Hence the smarty-pants reference to apartments for, if you've ever bought one with the assistance of mortgage finance, you've amped up your vega.
Vega is also one of the Greeks. As classicists are fond of reminding the youngsters, Vega is not actually the name of any Greek letter (the Greek letter "v" is called nu), but this only goes to show portfolio managers tend to know more about Canadian singer songwriters than they do about classical typography. And if you didn't know that you've got bigger things to worry about.
Anyway, vega is relevant, if you're really interested, in the calculation of Black-Scholes formulae for pricing European options, but it is more relevant in that it is frequently (and some might say) wilfully) mistaken for alpha by uninspiring fund managers and their associates. If you ever see the expression leveraged alpha you may be fairly sure there's some buffoonery at work, and the victim of it is most likely to be you.

Leveraged Alpha

Snake Oil, basically.
Leveraged alpha is technically possible, but in practice harder to find than the proverbial West Coast Pub on Anzac Day. 
what most people claim to be leveraged alpha is, usually, really plain old vega - that is, just leverage. If your market benchmark is beating the borrowing rate, you will make money by borrowing.
If someone pitches "leveraged alpha" product to you, they are most likely a charlatan - which you would expect, it being the financial markets and all - and a mediocre manager. Especially if they use backtesting to demonstrate their historical alpha.

Go hunting for charlatans here


It is a little-known fact that the expression "beware of Greeks bearing gifts" is not an oblique reference to the Iliad, but in fact a truism handed down through generations of portfolio managers warning their young kinfolk about the perils of option pricing. The full expression is:
Beware of Greeks bearing gifts, especially vega and leveraged alpha.
Greeks, in financial argot, refer to letters in the Greek Alphabet - alpha, beta, delta, and vega*, and they are approximations representing the market sensitivities of options or other derivatives. Each Greek measures a different aspect of the risk in an option position. Through understanding and managing these Greeks, financial market participants can manage their risks appropriately, whether they deal in OTC or exchange-traded options.
Through mangling them, and particularly by conflating alpha and vega, less talented market participants can make their structured products sound a lot cleverer and more exotic than in truth they really are.

*Classicists may notice that Vega isn't actually a letter in the Greek Alphabet, but a Canadian Singer-Songwriter.


"Alpha" is a buzzword beloved of unimaginative derivative salespeople and second-rate hedge fund managers and hence was much abused in the run up to the great financial crash of 2008. Like many financial buzzwords, it is derived from a technical term in portfolio management theory which does actually mean something, though through long misuse in the hands of such charlatans the original, literal meaning has fallen almost completely out of use.  
In a technical sense, alpha is a measure of market outperformance: it gauges the variance of a portfolio's performance over the market average, or "beta". An investment manager's alpha, therefore, is the added value that manager brings you that you would miss out on if you just invested in the benchmark. 
Hence why it's so popular in enhanced acronyms, tending as they do to be a means of hawking a new products, which one likes to imply will be better than everything else out there. Alpha is thus a catch-all buzzword which more or less stands for "really cool". And when have you ever known a salesman not to think his product is really cool? Also, it's a vowel, and you need lots of vowels to make good acronyms. 

The love-hate relationship between Alpha and Vega
All this talk of greeks brings to mind the critical distinction between alpha, beta and vega. Strictly speaking, the measure of alpha excludes the amplifying effects of leverage (borrowing to invest in the strategy, magnifying profits and losses of a dollar invested). Leverage increases the volatility of portfolio returns. But volatility is measured by vega, not alpha. While fund managers, and in particular rubbish ones, are very keen on conflating these two, they are, in fact, very different.
For one thing, it's much easier to create vega: anyone and, indeed, everyone can: you simply introduce leverage. (Have a mortgage on your house? congratulations; you've generated vega).
Alpha, on the other hand, really is special, since QED only a certain portion of the market can generate it. Because it's an expression of variance from a mean, for every whizzkid who generates positive alpha, someone's generating an equivalent amount of negative alpha (i.e., returns than are worse than the market alpha).

Why you should run for the hills when you see a product called Leveraged Alpha
"Alpha" was a far more credible label when hedge funds were a small segment of the market comprising the crème de la crème of the city's trading talent - the Soroses and GLGs of the world, who really could outperform the rest of the market. If someone is incautious enough to claim they're generating leveraged alpha, they're either so stupid as to admit they're really just gearing the shit out of your investment (if it goes wrong, guess who loses?), or they think you're so stupid you won't understand that. And quite possibly both.