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Book Review: Unmasking The Language Of Wall Street

Tom Burroughes Group Editor 16 May 2012

Book Review: Unmasking The Language Of Wall Street

A recently published book seeks to unravel the language employed in and about financial markets to show the many biases and unwitting assumptions people make.

Rarely a day passes without fresh evidence that the denizens of Wall Street and other financial capitals have feet of clay. For every whizz kid with his swanky apartment and home in the Hamptons or the Caribbean, there are tales of big losses, hubris and disappointed investors. As I write, JP Morgan is embroiled in an embarrassing loss of at least $2 billion. 

To say that the skills of financiers and investment managers are regarded with skepticism these days is a heroic understatement. And of course, as you might expect in the aftermath of the 2008 financial storm, there has been a slew of books describing, with varying degrees of anger, relish, condescension or head-shaking sorrow, what has gone wrong.

Sometimes, however, a big book comes out which attacks the subject of the financial markets from a different perspective from the usual quarters. And one such book – all 616 pages of it – is Word$ On The Street: Language And The American Dream On Wall Street. Written by Leo Haviland, who has worked for the likes of Goldman Sachs and other institutions, this tome unpicks the very language that is used by financial practitioners, commentators, the media and others to describe what happens in markets.

With exhaustive use of detail, he describes how many terms often loaded with biases are used sometimes unwittingly to convey what goes on in markets. He claims to explode the notion that the language employed is an objective, scientific description of what goes on. Instead, Haviland argues, metaphors reinforce certain prejudices and illusions. Language that borrows from war, sports, religion the fine arts and politics will sometimes create a spurious narrative to quite random events, or create a false set of alternative choices for investors, or misleading sense of reverence for institutions that are in fact undeserving of such reverence, and so on.

Here are a couple of paragraphs to give a flavor: “Thus an object of inquiry called “the market” or “the free market” (many people believe in and have faith in the free market) and its so-called mind, behavior and laws not only are studied but are often respected (like an ethical command) or venerated (like a god or spirit). Reverent poets on Wall Street – and even many economists – invent a God of the Market and endow price and other economic data such as gross domestic product with fantastical powers.” (page 151). And this: “Many Wall Street prophets of profit preach a gospel that faith in the upward movement of United States equity investments over the long run is rational and good.” (page 466).

Behavioral finance

His work can be seen, partly, as an extension of the insights of what has become known as “behavioral finance”, a discipline that seeks to debunk the notion of Economic Man and the idea of market efficiency (as in the idea of prices discounting all known information) and instead focus more on the biases, habits and crowd mentality of humans in markets. The wealth management arm of Barclays, the UK-listed banking group, has made a point of using the insights of behavioral finance in dealing with its clients, for example. 

While all of this is worthy in itself, and any attempt to debunk certain assumptions is welcome, your reviewer’s main reservation about this book is its length and lack of punch in coming to its points: the book is simply way too long for all but the most devoted followers of these ideas. I am not sure if the intelligent layperson who wants to avoid some of the errors of modern finance is going to read this book all the way through, although it is nice to dip into some of the chapters.

Another reservation I have is that when a person claims to pierce through the veil of language and metaphor, and challenges whether people really are ever able to be objective and rational about the world around them, it does rather raise the uncharitable thought in my mind that the author in question might argue for some modern sort of Philosopher King to deal with all this chaotic and misleading behavior. It does not seem as though Haviland goes down this path; however, his occasional hostile language about Wall Street and its “propaganda” makes me wonder where he sits in terms of the role of the State in regulating and controlling all this.

In fairness, I think Haviland is as sensitive to the hubris of policymakers (such as Alan Greenspan, politicians or the current boss of the Federal Reserve) as any private investor. I particularly liked the way that Haviland, for example, demonstrates how the language used in the market place can confer almost Godlike status on institutions.

We should remember that institutions such as the NYSE, the Chicago Board of Trade or auction dealing rooms are, at root, just places where fallible humans meet to exchange, trade and converse. That is all there is to it. Such market nodes don’t even have to have a physical presence in this online era. Also, humans make errors, and the regulators and others supposedly operating the rules of the game are as error-prone as the most hubristic of hedge fund managers or derivatives traders. Well-meaning rules can create unexpected costs.

So long as anyone reading this book comes away understanding that humans are prone to error and can be swept up in dramas of their own imaginations, this book, like others of its type, will have performed a useful service. I just wish it was shorter.


Word$ On The Street: Language And The American Dream On Wall Street, by Leo Haviland, is published by Dog Ear Publishing, 2011. ISBN – 978-145750-804-2

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