Investing 101: Don't Be Fooled by Corporate Jargon

NEW YORK ( TheStreet) -- In my first Investing 101 article, I talked about the importance of communication between corporate leaders and shareholders. Specifically, I highlighted why investors should find out who, and what, they're getting in bed with.

My goal was not to be cynical. While I do believe the majority of CEOs do conduct themselves with some modicum of honesty and integrity, the Enron bankruptcy taught us to appreciate the things CEOs say with a bit of skepticism until the evidence proves otherwise.

In this article, we will uncover ways investors can pick out "management speak," also known as "corporate jargon," or words that sound good but are often filled with superfluous non-achievements. Let's find the true meaning of vague statements like, "We're taking action to improve execution" so that investors can arrive at what it is that really moves the business and company forward.

Take, for instance, that particular quote above, which was coined by former BlackBerry (BBRY) CEO Thorsten Heins, who was also notorious for using terms like "build and invest in the future." Heins often talked about how his company was "focusing on vertical specific opportunities." Never mind that he stopped short of offering any meaningful detail regarding these ideals, his words were nonetheless interesting. Unable to transform his vocabulary into meaningful results, Heins was fired five months later.

In fairness, though, Heins is not alone in "talking the talk." For instance, although IBM (IBM) commends a great degree of the Street's respect, the company has grossly underperformed over the past couple years, particularly against much nimbler rivals like (CRM) and Workday (WDAY), two fast-growing rivals that have taken over the cloud.

As with the vague statements made by Heins, in response to recent threats to explain IBM's recent 4% revenue decline, the company's CEO Ginni Rometty said, "We're going after higher margin businesses." Investors seemed content with the statement. What does that even mean?

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