No Acronyms Allowed!

“We have to depart the LZ by 0500 so that the recon can be complete by 0600.”  That was about all I remembered from the briefing…or all that I could understand.

The briefing was given in the mess hall of a navy ship in the middle of the Mediterranean. I was part of a Marine unit that was deployed to the Middle East for six months. Given the instability in the world, the MEU Commander had to develop contingency plans for all types of situations.

These types of briefings are normal during a float. For example, if an embassy had to be evacuated, the Colonel of the deployment had to formulate a plan on how to accomplish the evacuation. Logistical complexities of such missions require that the Marine Officer would have to brief the Colonel, in a single meeting, on the strategy to employ. If any of the proposals seemed out of whack, or needed to be fixed, this was the platform where it was done.

Briefings usually lasted about an hour.  It was not uncommon to have thirty or so people presenting. Air officers, helicopter pilots, infantry officers, ordinance officers, radio specialist, etc. would all have their say. In order to make the briefings quick and keep them moving along, acronym’s were used to speed things up.  But given the number of groups inputting their perspectives and expertise, each with its own lexicon, it was like listening to a cacophony of terms that, for the uninitiated, was super confusing.

The U.S. Marines have been around for over 200 years. To their credit, they have been able to successfully orchestrate the system that brings all this diversity of information together. Luckily for me, I was able to figure out what was being said!

When I transitioned to finance and started working at an emerging markets desk, I had to once again learn a new language: this time it was “finance speak” and the acronyms used in that world.

The nature of the finance world is that it is secretive and cut throat. I did the best I could with the new language, but it was close to impossible to understand all of the jargon. In the Marine Corps, the officers would go out of their way to make people understand what they were saying (afterall, lives were on the line). But in finance, it was common for people to give vague and unhelpful answers.

Michael Burry, who made millions of dollars shorting the housing market, said one of the reasons he looked into the trades with greater scrutiny was the sheer number of acronyms and jargon used to describe the housing market. When he called bond salespersons to walk him through the details of the structures he was thinking of buying, he realized that for all of their pedigree they understood very little about what they were selling.

So, to educate himself on all the terminology, he ordered a variety of prospectuses and started combing through them to understand all of the terms. He created a dictionary of those terms and acronyms until he understood everything that was being marketed and sold to investors.  Armed with that knowledge and understanding he bet against Wall Street… knowing that the firms selling those instruments had no idea what they were doing.

Ray Dalio, the hedge fund manager of Bridgewater, does not allow any acronyms to be used in meetings or reports. Everything has to be explained down to the last detail, so that everyone within his firm understands what they are doing. He has stated that acronyms become like a code and secret language behind which people hide.

True knowledge comes from being able to explain things;  even the most complex things.

Part of the reason most of the major financial institutions went under during the last crisis was because information was hidden and guarded. Many of the employees at the banks had no idea the extent of the recklessness of their mortgage departments.  At the time, I worked at Merrill Lynch on a bond desk.  We were having a great year and had no idea the damage the mortgage department was causing. We were shocked by the amount of risk they had taken.  Be assured that had more people been informed of the risks the mortgage area was taking, the positions would have been wound down and the bank saved.

In reading memoirs written prior to the crash about working at a bank and trading for one,  what stands out for me is the lengths to which employees, as well as management, guarded their trading secrets. The mindset was, “If show people how I am making money, the firm will fire me and do it for themselves.” So the information was never shared.

Contrast this attitude with Google which gives away all of its information for free.

Part of the reason Bridgewater is so successful is because it shares its information. Bredgewater is relentless in getting at the truth…even down to the language it uses.  No abbreviations.  No acronyms. If you work for Bridgewater and want to share something, you must explain your thoughts fully…down to the last detail. Imagine if that same rigor and search for the truth had been the standard for the banking industry prior to 2008. How different our lives would be  today!

It really makes you wonder why its ever done otherwise.  Truth is inevitably revealed and when it is, it also prevails. Both companies and individuals willing to embrace that fact are the ones that will survive and prosper this time of cultural transition.

Steve

sleeclark@gmail.com