Words vs Terms

While listening to a Morgan Housel podcast, he spoke about how some people talk past each other and not to each other. It was one of those interesting concepts that make sense as soon as you hear them, but you never put it succinctly yourself. For example, two people want to talk finance with each other. One talks about value investing and how the true magic in wealth happens in compounding, and the other talks about hyper-growth and certain stocks going to the moon. The difference lies in what they mean when they think of finance. One views investing as ownership in a business—which is, at its core, what owning stock represents—while the other is focused on trading an asset from one price to a much higher price.

For an uninformed outside observer, they’re both talking about finance and seem to be pretty engaged with each other. However, if you dig beyond the surface, you’ll find that the conversation is not engaging at all, and they are in fact talking in parallel instead of to each other. This reminded me of another concept I recently read and never thought about, words vs. terms. A word is not a term. A word can have many meanings. Therefore, if people use the same word but mean it differently (like the example above of both people talking about investing) they shared words between them, but they have not come to terms with each other. This is what it means to speak in parallel or past each other. To quote directly from “How to Read a Book” by Adler and Van Doren, where I learned this concept: “when there is ambiguity in the communication of knowledge, all that is in common are the words that one person speaks or writes and another hears or reads. So long as ambiguity persists, there is no meaning in common…” between the two parties. Therefore, to truly distinguish between a word and a term, a term is a “word used unambiguously”.

I write about and share these concepts to illustrate what I see is wrong with general advice, especially when it comes to finance. Finance as a word may mean many things. Money, business, an industry, etc. But, to communicate unambiguously, it is very hard to reach a person when you make blanket statements to reach a person “on average”. This is why I have come to terms (pun intended) that when you communicate with someone, especially if it involves investing, you understand who they are, what they want, and tailor your discussion based on their terms.

What are your goals? What do you desire? What principles make up the foundation of your decisions? We are all anchored to something. Muslim investors are anchored by the boundaries set by Allah (SWT). Ethical investors (regardless of religion) are anchored by their core humane beliefs and avoid certain companies or products. An investor anchored solely by profit will invest in anything that makes money, regardless of how that money is made.

This is why Investor Clarity was created. We realized that the modern financial landscape is too complex, too ambiguous, and nothing about it is personal. There is no shortage of data, apps, and YouTube videos that tell you how to retire a millionaire, or the 5 steps to become financially independent. Almost none of them take into consideration where you are in your journey. Remember, you’re not a person “on-average”. While there are lessons to learn from others, you are your own full-not average- person with your unique circumstances and ambition.

The takeaway here is before asking what to invest in, we should first ask what we are investing for. Before accepting financial advice, we should make sure that we and the person giving it are using the same terms, pursuing the same goals, and operating from the same principles. Otherwise, we may be speaking the same language, using the same words, but not coming to terms with each other.

Thank you for reading. Keep searching forward.