I wrote recently about AREIT’s stock price falling due to a block sale [MB link], where I said that I wouldn’t be able to take advantage of the price dip because “I’m honestly out of dry powder.” Some readers asked what “dry powder” means, and I’ve done this long enough to know that if two people ask, there are probably hundreds of similarly confused readers suffering in silence. Cutting to the chase, in the investing context, “dry powder” means deployable cash. It’s an old-timey military term that refers to gunpowder; in the days of cannons and early firearms, gunpowder had to be stored carefully because wet gunpowder is useless gunpowder. “Dry powder” is gunpowder that allows an army to react at a moment’s notice. Same in the investing context, except that here, the gunpowder is cash, and we don’t care if that cash is wet or dry (well, COL might, but honestly, they’re probably just happy to take it from us).
MB bottom-line: I think casual finance speak is filled with sports and military terminology, which is fine if you come from one of those backgrounds, but it is also probably frustrating for those who didn’t grow up watching war movies and American pre-game shows. For a guy who spends a lot of his time trying to demystify finance and investing, and especially for someone such as myself who loves a good idiom or turn of phrase, I need to do better to make sure what I say is understandable to all of my readers. Thank you to the readers who took the time to check with me for clarification!
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