The referential theory of meaning holds that (1) words function as labels that stand for or refer to objects, people, and states of affairs in the real world, and (2) the meaning of a sentence is determined by the individual references of its components and how they are combined. However, this theory faces four key problems: (1) some words like "nobody" don't refer to real objects, (2) words can have different meanings despite referring to the same thing, (3) the objects words refer to are constantly changing, and (4) people's semantic expertise, or ability to identify referents, varies.