Photo: Mamta Badkar
Earlier we wrote a post about John Hussman’s criticism of Ben Bernanke, and mentioned (as a minor point) that Hussman calling Bernanke a coward if he did QE3 was a form of book-talking, since Hussman is very negative on this market, and QE3 would probably be good for stocks.Some people wondered why we saw fit to point out this particular example of book talking, since book talking is what everyone does, and since we don’t always make a point of saying that.
Fair question: So let’s clear it up.
Bringing up book talking is very useful when the person talking is making an argument about what should happen, when it also happens to affect their portfolio in a certain way.
So for example, some people go on TV and they say “buy Apple” and they’re talking their book (because they’re long Apple), but it’s cool because everyone gets that, and the implications are pretty benign. You just have to assume that everyone on TV is promoting their own portfolio.
But other people go on TV and say things like “Bernanke is a coward” or “Financial repression” or “Obama should subsidise natural gas” or “Obama should block the Keystone Pipeline” and in those cases it is worth pointing out when that person has an investment that would happen to do particularly well if said demand were carried out.
So yes: With normal investment calls, claiming “book talking” is a snoozer. But when someone veers into policymaking suggestions or other kind of broader ideas, this is something worth bringing up.