Everyone knows that businesses have ups and downs, good days and bad days. But even the most widely accepted conventional wisdom can't make an unprofitable earnings statement disappear, and when investors lose their money, tired tropes about economic cycles are far from reassuring.
Luckily, there's one handy tool that can transform gray skies into blue, lemons into lemonade and crippling losses into promising growth. By employing a few handy buzzwords, wise businesspeople can spin failure into growth and bad news into public relations gold.
One ploy for turning a plummeting disaster into a promising turnaround lies in pairing bad news with upbeat terms to create a phrase that evokes positive feelings, even while it expresses negative news. Thus, "losses" become "negative gains," and shrinkage becomes "negative growth."
Moving Beyond Business -- Way Beyond
In addition to camouflaging bad news, this technique can also make acceptance of terrible things into a sort of personal enrichment. For example, rather than "accepting losses," one can "realize negative gains." While the first phrase sounds like a form of surrender, the second suggests the hard-won maturity that comes from accepting the ebb and flow of fate.
The term negative gains dates back to at least the mid-1960s, when analyst PK Sawhney used it in a study of the Indian cement industry, but it seems to have gained popularity during the latest economic downturn. Recently, Chartpoppers' noted "Negative Gains at Nasdaq," Penny Stock Live highlighted "Stocks with negative gains at NYSE" and InvestorCentric Blog noted that we're coming off a decade of "negative gains in stocks."
However, the term has moved far beyond the business arena to find common usage in autism research, the bodybuilding community and -- perhaps most notably -- penis enlargement forums. The last area, especially, is one in which the sunny optimism of "negative gains" seems especially useful.
That's Not a Contraction, It's Negative Growth
In the grand scheme, gains are attractive, but "growth" is vital. Unfortunately, while slow and steady growth can continue more or less indefinitely, many business models rely on the assumption that impressive, substantial growth can be eternal. Of course, this is untrue: Eventually, every industry and every economy must have a downturn when demand recedes, the market shrinks and losses occur.
This, too, is one of those places where negative spin can come in handy. Rather than saying that the economy is shrinking, contracting or falling off a cliff, one can argue that it's going through "a period of negative growth." While seemingly transparent, this is a surprisingly common gambit, and it has proven quite successful for many financial analysts who want to downplay losses or avoid using bad words like "loss," "failure" or "cataclysmic disaster."
Recently, for example, Seeking Alpha, Morningstar, and Bloomberg Businessweek all invoked the term to discuss stocks that are headed downhill. However, the most extravagant use of negative growth occurs on Chartpoppers, a business site that features a regular "Negative Growth Stock Spotlight," featuring shares that are losing value.
While the negative gambit may seem a bit obvious, it is surprisingly powerful. Telling a friend to give up in order to egg him on to greater achievement is "negative support," and fired schoolteachers are the product of "negative retention." A desperate sell-off of a company for less than its book value is "negative goodwill," while an asset whose value has plummeted below the cost of the loan used to purchase it has "negative equity."
In fact, from "negative carry" to "negative arbitrage," "negative assurance" to "negative returns," the finance industry is full of phrases that make the bad sound good with the simple addition of a spoonful of sugar. And if that results in negative clarity, well, isn't that the point?