The 5 Phrases That Should Always Raise Red Flags

By Bristol Voss  AUG 01, 2012 3:50 PM

Verbal trickery, where you've heard it before, and its literary correlations.


MINYANVILLE ORIGINAL Clichés are often mocked, but to their credit, they usually have a grain (or more) of truth to them. They’ve just been beaten like a dead horse for too long. (For one hilarious example of said dead-horse beating, check out Justin Rohrlich’s Financial Prognosticators Completely Obsessed with Saying Greece Is 'Kicking the Can Down the Road.')

Far more insidious are the phrases that seem true, but are actually verbal smokescreens. Every time they've been trotted out, calamity has followed those who believed these phrases. Interestingly, they all have literary corollaries.

Here are five of the worst offenders.

Phrase: It's different this time.
Popular During: Dutch Tulip Bulb mania of 1637, Crash of 1929, Bre-X gold mining scandal of 1996, Nasdaq in 2000
Literary Correlation: The Scorpion and the Frog
Frequency of usage from Google (GOOG) ngram (note ngram only goes through 2008):

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Phrase: You need to understand the new metrics.
Popular During: Dot-com/tech bubble of 1995-2000, credit default swaps/mortgage meltdown of 2007-2010
Literary Correlation: Ecclesiastes 1:9: "So there is nothing new under the sun."
Frequency of usage:

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Phrase: Too big to fail.
Popular During: Baring Brothers collapse in 1890, Chrysler Corporation bailout in 1970s, Continental Illinois bailout in 1980s, Long-Term Capital Management bailout of 1998, Lehman Brothers bankruptcy of 2008
Literary Correlation: The Decline and Fall of the Roman Empire
Frequency of usage:

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Phrase: Self-policing / self-regulating.
Popular During: Catholic Church abuse scandals 1950s-1980s, FINRA, Members of Congress vis-à-vis insider trading
Literary Correlation: Adam & Eve
Frequency of usage:

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Phrase: Segregated customer funds are sacrosanct.
Popular During: Drexel Burnham Lambert before 1990, Madoff Investment Securities before 2009, MF Global (MFGLQ) before 2011, PFGBest before 2012
Literary Correlation: The Dog and His Master's Dinner
Frequency of usage:

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If you hear one of the phrases listed above, run for the hills.
No positions in stocks mentioned.