A metaphor is the comparison of one expression to another (not necessarily literally correct). Example -“The money is running out”. It’s not actually running anywhere but we tend to understand the meaning. A simile is a type of metaphor that uses ‘like’ as a descriptive connection. Example – “My love is like a red, red rose”. (But NOT “The money is running out like” – Ed). An analogy is a further type of metaphor that offers a more definitive comparison. Example – “Don’t put all of your eggs in one basket” is an analogy for risk diversification.
Finance is awash with metaphors, similes and analogies that make it difficult for lexicologists to differentiate – but make it completely impossible for consumers to navigate. Wars, battles and conflicts are common themes in financial jargon – defensive positions; support lines; resistance points; bulls & bears; hawks & doves. MMPI’s goal is to make financial concepts easier to understand by using simpler and more meaningful analogies than those generally used by professionals. Some consumers are offended that they are not considered capable of reading the markets or understanding volatility. MMPI believes that consumers need to be guided not patronised.
“The stock market is like a casino”. MMPI – very few consumers frequent casinos.
“Be content with singles instead of trying for treble twenty”. MMPI – don’t play darts with money.
“The stock market takes the stairs up but the elevator down”. MMPI – consumers should always use the escalator.
“A bear market is like shouting fire in a crowded cinema”. MMPI – go to the matinee – fewer patrons.
“Liquidity is like oxygen. You don’t notice that you need it until it’s gone”. MMPI – make sure you have enough put aside for emergencies.
“Having no financial insurance is like skydiving without a parachute”. MMPI – always make sure you have adequate insurance; no excuses.
“Good investing should be like watching paint dry”. MMPI – time is of the essence.
“The number of investment options is like the number of outfits in a ladies wardrobe”. MMPI – very horsh!
“Bond prices and interest rates behave asymmetrically”. MMPI – bond yields and interest rates move in the same direction.
“Investing styles are like a box of liquorice all-sorts”. MMPI – Never eat the whole bag.
“Central Banks taking on more debt is like giving a drunk another drink”. MMPI – Rehab is often the best option.
“Finance and poetry are incompatible”. MMPI – Stick to nursery rhymes.
Academics try to be smart by using an analogy for market volatility as someone going up the stairs while playing with a yo-yo. The fact that the yo-yo goes up and down doesn’t prevent the person from eventually reaching the next level.
Financial planning is like an airline trip – knowing where you are starting from is much more important that deciding where you’re going. A tourist map with the words “YOU ARE HERE” is an essential starting-point analogy for every financial journey – but one often ignored by consumers.