I’m a self-confessed word play nut. I love the wordsmith process because it’s a constantly evolving process that illustrates new or existing concepts, that describes the etiology of new areas of study, and highlights the evolutionary process of how crowdsourcing and groupthink enriches the English lexicon.

Not surprisingly, I bookmark like crazy and, sometimes annoyingly, incorporate them into everyday conversation. However, not everyone shares these beliefs or keeps up with neologisms as much as I do, but because they offer so much value, I feel they need more coverage and discussion.

So without few adieu…

My Favorite Neologisms and Buzzwords of 2010

Note: many, if not all, of these were created prior to 2010. I just hadn’t yet ran across them.

Hopium

Probably my favorite neologism I came across in 2010 since it promotes delusional thinking and keeping your head so far in the clouds that you never see the steamroller about to run over your feet.

The stubborn refusal to look reality in the face and just keep on wishin’ and hopin’.

– Seeking Alpha

As a finance guy, I’m also partial to this definition since it highlights the delusions we often tell ourselves when we’re on the losing side of a trade.

In securities trading a trader is said to be under the influence of the fictional narcotic hopium when she/he finds themselves deeply in the negative on the wrong side of a trade. The trader will continue to hold the position in the hopes that the security will return to the value at which they acquired it. (eg. staying long in a stock position when the price continues to plummet)

Example) Cramer, you are totally smoking hopium man, thinking that stock will go back up anytime soon. Just sell it and get out!

– Urban Dictionary

As I like to say… hope floats, until it doesn’t.

Purpose Motive

To act as an agent of change for the better. To quote an example from Steve Jobs: we want to put a ding in the universe.

More and more organizations want to have some kind of transcendent purpose. Partly because it makes people work better. Partly because that’s the way to get better talent.

And what we’re seeing now is that when the profit motive becomes unmoored from the purpose motive, bad things happen. Bad things ethically sometimes, but also bad things like not good stuff: like crappy products. Like lame services. Like uninspiring places to work.

That when the profit motive is paramount or when it becomes becomes completely unhitched from the purpose motive, people don’t do great things.

– Daniel Pink, RSA Animate

[video]

Example of profit motive overtaking purpose motive: Merrill Lynch MBS & CDO traders buying & selling securitized products that lost the firm’s money, but allowed the traders to rack up huge personal gains at the firm’s expense. This small group of traders then put the firm on a path to financial ruin in which there were only two escapes — sell the firm or bankruptcy protection.

Active Inertia

Doing something is not as productive as doing nothing in some cases. Especially, when that “something” requires the expenditure of goods or assets that cost the company money with no or little return on investment.

Managers often get stuck in an unproductive habit, so when an entirely new situation comes up they revert to old reactions. Active inertia, according to Daniel Sull of the London Business School, is “management’s tendency to respond to the most disruptive changes by accelerating activities that succeeded in the past”.

When managers are deep in a hole, they should stop digging. Yet, like a car stuck in the mud, they keep the engine revving as if they are on a normal smooth road. They do this to a certain extend because they “associate inertia with inaction”. But inaction does not necessarily mean that nothing is going on. When soldiers are not in combat, they keep themselves in a state of active vigilance. Companies should follow the same way.

- Investuristic.com

Collingridge Dilemma

Ever wonder what would happen if suddenly went from a hydrocarbon powered world to a solar powered world? How about a Microsoft Windows powered world to a Unix powered world? If you have, and ever considered just how much time, effort and money lost it would take to rebuild the surrounding infrastructure, retrain the workers and how long it would take to see a net gain in productivity, you’ve stumbled upon the Collingridge Dilemma.

As defined by Wikipedia:

The Collingridge dilemma is a methodological quandary in which efforts to control technology development face a double-bind problem:

• an information problem: impacts cannot be easily predicted until the technology is extensively developed and widely used.
• a power problem: control or change is difficult when the technology has become entrenched.

I would add a third problem relating to economics: when a branch or subset of economic developments have become too entrenched or becomes “too big to fail”, that it requires enormous quantities of future assets to prop it up in fear of system wide collapse and/or complete failure (e.g. a real life “Project Mayhem”).

Spaving

I would wager half of my expenses or more are somehow based on spaving. Particularly, in an effort to get a lower cost of goods by buying in bulk.

For example, buying a 5 liter bottle of XYZ because the cost per liter is less than a 1 liter bottle of the same XYZ product.

Spending to Save. With many discount cards at supermarkets, credit card discounts, and bulk warehouse stores like Sams Club, you can only reap the benefits, namely saving, by spending.

Ex) I spaved all day at the mall and walked away with an entire fall wardrobe for 50% off retail.

Dan Faltyn, Urban Dictionary

ETFification / ETF’d

Now that much of the world’s valuables have been placed in some type of Exchange Traded Fund (ETF), it begs to question what assets will be immune to this phenomenon, or dare I say, institution, over the next decade.

With the huge popularity of Exchange Traded Funds in today’s financial markets, that market makers are only limited by their imagination, and their creative accounting skills, at what assets, commodities or random grouping of equities they can throw together and slap an ETF label on it.

I keep waiting for an ETF that only includes Too Big To Fail companies like airlines, banks and auto makers trading under the ticker symbol “TBTF“, but I’m not holding my breath.

Confirmation Bias

With so many flavors of “news” made available to viewers/readers these days, an interesting trend is emerging where opposing ideologies generate their own “facts” leading to the rise of confirmation bias among consumers.

Twice as many people tend to go searching for information that they find agreeable to their preconceived notions or parallels their belief structure. In other words, if someone wants to believe X and Y but not Z, they won’t go looking for Z.

The result, of course, is a populous who lacks a functioning BS detector and, more than likely, are more apt to be misled than someone who thinks for themselves. Of course, everyone likes to believe they’re neurons are more autonomous than they really are, so it becomes quite a Catch 22 scenario.

Recycled Keynesianism

The year of 2010 was a year where we discovered who was swimming naked when the tide rolled out. And with that knowledge, many of our political ideologies were contested, changed, and perhaps even further cemented.

My individual political views were most influenced by this quote from a former Reagan budget director who lowered the boom on the neoconservative movement (one I used to call my own):

The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing — as suggested by last week’s news that the national economy grew at an anemic annual rate of 2.4 percent in the second quarter.

Under these circumstances, it’s a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever.

– David Stockman, NY Times Op Ed

Tough words to hear, especially for fiscal conservative posers, but the words “recycled Keynesianism” need to be repeated loud and clear since we aren’t engaging our polical leaders effectively enough to enact real change, and not the backroom lobbyist and political campaign contribution type of change.

Melt Up

After the stock market crash of late 2008 and early 2009, the Federal Reserve set out on a campaign to prop up every single asset class on Planet Earth by “expanding its balance sheet”, the buying of U.S. national debt (POMO program), and the infamous quantitative easing campaign. This was an inorganic, unnatural capitalistic process where massive government reserves provided the bait insurance for professional speculators to come back into the financial markets, or at least, stop shorting the most vulnerable sectors.

Perhaps the best quote to sum up the phrase “melt up” is :

You can’t be short a market where the Fed is saying “we’ll do whatever it takes to hold up every asset class.”

— Barry Ritholtz, The Big Picture blog

Not surprisingly, the phrase melt up also encompasses a 50% rise in the stock market when fundamentals are still bad, if not worse.

Agnotology

Whether you believe it or not, there are actually people in this world that have a vested interest (politically, business, cultural, etc.) in keeping information from you, or at the very least, making you believe something that isn’t entirely accurate.

Agnotology is the study of culturally-induced ignorance or doubt, particularly the publication of inaccurate or misleading scientific data.

– Robert Proctor, Stanford Professor of Science & Technology

Apologies if this makes you lost a little faith in mankind, but as anyone who has ever told a child to “behave because Santa Claus is watching”, you’re not exactly an innocent along these lines.

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What about you? Got anything in particular from 2010 that really changed your mind or changed your outlook on the world?

Got anything that might have helped you see the world with greater focus or order? Conversely, how about an idea that made the world appear more random than orderly?