The English language is, for better or worse, extremely well
suited for tricking people. Consider the sort of phrases used in
stock recommendations: "This stock is racing higher!" or "This
company doubles its revenue every quarter!" or "This company is
paying a 17% dividend yield!" To be accurate and allowable, such
phrased need only describe what happened
in the past
, but is that all they imply? The answer is no, of course. One
reads "This stock is racing higher!" as descriptive of its
instantaneous velocity, as if a stock actually had such a thing.
Past facts, present tense, future implication.
It would be brilliant, if done consciously, but it usually is
not. How do I know? Because those who write this way tend to
trick themselves, sometimes to an even greater degree than they
trick their readers. This mistaking of the trend for the forecast
is not only commonplace, but an entire pseudo-science,
, has grown up around it, imbuing the misconception with a sort
of talismanic authority.
It is an easy mistake to make, under some circumstances. I
have made this mistake myself when describing revenue growth over
time. In other circumstances, when describing dividend yield, for
example, it can be an
error (or even deliberate deception). That's because when a
company has such a ludicrously high dividend yield, what is most
likely being expressed is the
stock price in relation to its
dividend. This typically means that the price of the stock has
recently fallen sharply, and sadly enough (for those who buy
these stocks without doing their own research) the price may even
have fallen due to an announced dividend cut, meaning the old
dividend rate is no longer even a trend, much less a
The trend is that these stocks are, or rather, were, climbing.
Read on for the forecast.
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