Something To Remember When Watching CNBC

I thought this was a pretty good post regarding portfolio managers and investment managers public statements. In our business nobody {including yours truly} speaks in a vacuum or for completely altruistic reasons. Part of the reason I publish here is to keep my clients informed. I also have found that putting ideas to paper forces me to focus and become a more disciplined investor. But I'd probably not put anything out here if I found this to be an unproductive use of my time. I've found Solas! to be a nice way to generate both new business and leads. Here's Abnormal Returns thoughts on the subject. {Excerpt}

Everybody talks their book, everybody. And no I am not talking about the “Talk Your Book” show on StockTwits TV. It is one thing to know that everybody talks their book. It is another thing altogether to know what to do about it.

First off, what exactly is “talking your book” mean? Talking your book is a phrase used to describe what portfolio managers are doing when they discuss their portfolio holdings. It is generally assumed that this discussion is to create interest (and buyers) of these securities. This will ultimately benefit the price of the security and the manager’s portfolio. The more cynical out there might see any sort of stock rise as an opportunity to exit a position as well.

Even that might be too simple an explanation. A manager might take the opposite tack and bad mouth a position hoping for a drop in price to allow further accumulation. Some are speculating that is exactly what happened when George Soros decried a growing gold bubble despite having increased his positions in the shiny metal.

As you can see there are no shortage of motivations involved here. A portfolio manager might also be giving interviews as a form of marketing for his or her business....

....The bottom line is that is difficult to take fund manager’s public security selections at face value. There are simply too many cross-currents at work to put much weight on their public pronouncements....

.....Portfolio managers talk their book. They talk their book for any number of reasons: some benign, some less so. But they are still talking their book. Thankfully there are some resources we can use to check what they say publicly against what they are actually doing, albeit with a lag.

Link: Everybody Talks Their Book