By Rick Glaze

The professional investment community is like other fields that have a set of unique buzzwords - it has a language all its own. The medical profession is a classic example. People struggle to understand it to advocate for a sick relative. Did you ever listen to air traffic controllers? Don’t! Most of their communications, you wouldn’t comprehend.

On Wall Street, trader slang can be quite colorful. “Don’t try to catch a falling knife.” Well, duh! But what does it mean? It means when a stock is falling or correcting, don’t try to pick the bottom and buy on the way down. Wait a while until things settle down. For example, if a stock goes from $20 to $14, give it some time because maybe it will go to $9.

How about, “Sell in May and go away?” That means that the summer is often tough on stocks, so take your profit and buy back in the fall when the market often rallies. Other assets have cycles too, like your house.

Spring is considered a better time to sell a house than winter, but you wouldn’t sell your house in spring and buy it back in the winter. Transaction costs would be too high and there is no guarantee that the market will react in your favor.

“Buy on the rumor, sell on the news.” That means buy a stock when or before the news of positive corporate events is disseminated and sell after the news is known and the latecomers start buying. The “herd” becomes your liquidity in the stock. There are plenty more buzz words from Wall Street. E-mail me if you know of some interesting ones.

Rick Glaze is the president of Glaze Capital Management Inc. of Los Altos and a registered representative offering securities through First Allied Securities Inc. For more information, e-mail Rick@Glazecapital.com.