What do you do when...

What do you do when you are talking to some one and you aren't sure what you guys are exactly talking about?  Do you pretend that you know what is going on? but then what if they ask a specific question.. and you are like ahh shit, i don't know what you talking about, and then you have to fess up and tell them. Then you kind of feel stupid after that. I hate situations like that. Should you fess up in the beginning right when you realize you don't know what's going on or what?