Authored by Luke Delorme via The American Institute for Economic Research,

As an investment advisor, I can’t help but sometimes fall into the trap of industry lingo. Mea culpa.

This is my short list of things I hear way too often in the investment industry, and my honest translation into English.

What advisors say: “Your returns were good last year because we maintained exposure to equities.”

What it means: “The stock market went up and we didn’t do anything stupid.”

What advisors say: “Your portfolio has downside protection in the event that the market falls.”

What it means: “Your portfolio includes both stocks and bonds (and probably some other stuff). Usually, when stocks fall, bonds will go up to offset the losses.”

What advisors say: “We’re cautiously optimistic about the market.”

What it means: “We have no idea what’s going to happen, but things generally go up if you wait long enough.”

What advisors say: “Economic fundamentals are strong.”

What it means: “Unemployment is low. Other economic factors seem to be moving in the right direction. The economy is growing instead of contracting. We have no idea what that means in the short term for the stock market, but a growing economy should help companies that issue stocks and bonds, which is good for investors over long periods of time.”

What advisors say: “The equity premium is still positive.”

What it means: “Stocks have historically gone up more than bonds. We expect that to happen in the future, although nothing is guaranteed over the short-term.”

What advisors say: “The 5-year return of this hypothetical portfolio was 7% per year.”

What it means: “The 5-year return of this hypothetical portfolio was 7% per year, which means practically nothing without context. The return over the next five years could be almost anything.”

What advisors say: “We see an opportunity in … emerging markets equities, small cap value, high yield bonds, gold, and so on.”

What it means: “Since no one knows what will do well next, it’s probably smart to hold a little bit of everything. That way, when something goes up, we can point to it and everyone will be happy.”

What advisors say: “We believe it is important to maintain broad diversification.”

What it means: “Again, since no one knows what will happen next, we want to be positioned to capture returns wherever they happen to show up. Also, holding a broad array of assets reduces exposure to any single asset that might tank.”

What advisors say: “Portfolio A has higher expected returns than Portfolio B.”

What it means: “Portfolio A is riskier than Portfolio B, and probably more concentrated in stocks. This may or may not be a good idea based on your financial needs, expectations, and circumstances.”

What advisors say: “These funds are actively managed.”

What it means: “Someone is getting paid really well to guess what companies to buy in that fund. There is no evidence that they can consistently succeed, but they get paid either way.”

What advisors say: “We are forecasting that X, Y, and Z will happen and the result will be A, B, and C.”

What it means: “There are an infinite number of possible outcomes in the world. Good luck guessing what will happen next. Even if you can guess it, financial markets will react unpredictably. We’re going to tell you that we’re forecasting something because it sounds good to tell a confident story instead of being honest.”

What advisors say: “We charge a very reasonable 1.5 percent wrapper on assets under management.”