Balanced by definition

What's in a word? A great deal when it comes to navigating the world of money.

- STORY MATTHEW GIBBS

Yin and yang. Sweet and sour. Risk and reward. Opposing yet complementary forces. Different but always interacting. Like love and marriage in the song by Frank Sinatra, “you can’t have one without the other”.

The world of money is full of these delightful dichotomies.

Bulls and bears is arguably the best known combination, originating in 18th-century London. Optimistic investors who think the market will rise are called bulls because the bovines use their horns to toss things up. Pessimists on the other hand (or other paw), who expect the market to fall, are dubbed bears because bears claw things down. Grizzly indeed.

A different ‘bare’ features in naked versus covered short selling. A naked short sale occurs when a trader sells securities without owning them or having a borrowing arrangement in place (being naked or exposed). The trader then seeks to repurchase those securities at a lower price to make a profit (the short selling bit). In contrast, a covered sale is when the seller has, as local regulations require, a “presently exercisable and unconditional right to vest” or bestow the securities in the buyer at the time of the sale. In other words, the seller has the stock and is covered.

Overexposure in the Australian environment is high-risk, whether on the beach or in business. It shouldn’t surprise that naked short selling was banned in 2008 during the global financial crisis.