Most of us have grown up listening to fairy tales in our childhood. And these fairy tales leave such a deep imprint in our minds that until we reach a certain age we believe in all the creatures created in these stories. The current generation of children & adults are ardent followers of the “Harry Potter” series, which is filled with magical & mystical creatures such as dragons, elves, garden gnomes, centaurs, etc. but no matter how passionate we are in our belief in all these creatures. We would never encounter a mysterious unicorn or an irritating garden gnome made of plastic.

In today’s world, you too will come across a few fairy tale terms in the big investment world.

Elves:

Commonly known to be helpful, as they helped the shoemaker & also act as Santa’s favorite aides for gift assembly. They as well don’t want anything in return except only food, and keep the payroll costs down. However, over time, they have left this typical job and moved over to Wall Street, due to children’s general pessimism and a few bad movies. And now in the world of investments, these elves appear in the form of human guests of the “Wall Street Week”, a show on PBS. Perhaps we call them elves because these are the technical analysts who guide the viewers about the latest market trends & general fluctuations & perhaps we think they will bring us some good news.

Leprechaun Leaders:

Leprechauns are mythical creatures in the Irish folklore, which spend their time making shoes and hiding gold coins at the end of the rainbow or on the Emerald Isle where no one could find it. They are known to have the nastiest of tempers, but with the help of some media, they have turned it into a positive point for themselves. They are known to have an excellent security system for their treasures, so much so that you cannot find it until you force a leprechaun itself into telling you. This title of a Leprechaun leader can be given to a CEO that loves to sit on the money reserves which actually don’t belong to him. And even if you catch him, he has already gotten the money coffers sent away to some other hide-out. However, though this leprechaun leader can’t bit off your fingers, he surely can cut out a number of your portfolio earnings.

Mad Hatter:

The hatter, or commonly called the Mad Hatter, is a fictional character in the Alice in the Wonderland series. He is known to ask riddles, without even knowing the answers himself. In the investment world, he has taken the form of a CEO or any managerial body that does nothing to help increases the confidence of the investors.

Gnomes:

Gnomes are said to be found in various parts of the world, e.g. in Norway, where they help farmers by frightening away the gremlins and being as intelligent as the humans themselves, in Africa. On the other hand, they are not very different from the gremlins, and they are known to be nasty creatures who would annoy you until you give them food, in Britain though, they are more like the leprechauns and spend their time hiding away money and gold in secret vaults. Their diversity could also be observed in the investing world, where they are found in two kinds; first type is the securities that come under the Freddie Mac’s cash programs & are known as gnomes probably because of their ability to ward off volatility gremlins, the second type belongs to Zurich, Switzerland, and are known as the “Gnomes of Zurich”. This nickname was awarded to the Swiss bankers by British labor ministers during the 1964 sterling crisis. These became so secretive that resemblance to the money-accumulating gnomes could be easily observed. This went off to the extent that British ministers had to quit using their terms, since the Swiss would also pinch them at night just like the little gnome fellows.

Smurf:

Once upon a time, smurfs were small, blue, fictional characters who appeared in comic television franchise, but unfortunately over the years, they ended up getting mixed in criminal activities, thus becoming “money-launderer’s” name in the investment world. Money launderer is a person who makes illegal money look legitimate by passing it through various corporate fronts. The term “laundering” originated from the fact that at one point in time, money bills were actually run through the cloth dryer to give them a worn out look of money that has been continuously in circulation. However, how the poor smurfs got into all this mess, is beyond one’s imagination.

Goldilocks Economy:

Goldilocks is a fair-headed fairy tale girl who can’t stay out of trouble and cannot even distinguish between humans and beers just like our little Red Riding Hood did. However, she really loves porridge and wants a perfect one that is “not too hot, not too cold, but just right”. In the investment world, the Goldilocks economy is similar to the way she likes her porridge to be served, which is “neither too hot nor cold, but just right”, which sustains a moderate and ideal economic growth. And it describes perfectly well, the U.S. economy during 90s, and also the economies that the former Federal Reserve Chairman Alan Greenspan is trying to formulate & preserve. However, unfortunately, the Bear Market (three bears from the story) is always there to spoil the party.

Sleeping Beauty:

In the fairy tale, sleeping beauty was a stunning princess cursed to be in an eternal sleep until her prince comes to wake her up. Similarly, in the investment world, sleeping beauties are said to be those firms & companies that seem to be the most attractive & find takeover targets, but have not been pursued or taken over. And they have enough powers to allure investors, thanks to their huge assets & great potential.

Dwarfs:

These are the little bearded warriors, valiant enough to be the first to charge at a dragon & catch the fire. They have extremely long life spans and live hundreds of years. In the investment world, they have found parallels in the form of Fannie Mae pool of mortgage-backed securities, which take an immensely long time to mature, i.e. 15 years.

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