'Bonkers' and 140 Other Words Never to Say to Market Reporters

Why You Can't Say These Words to Market Reporters

The comedian George Carlin darn near made a whole career out of a routine about seven words you’re not allowed to say on television.

The seven words were ... aww, shoot, we better not repeat them here due to the young and impressionable souls out there who are confessed readers of this column. (Finish your homework, Master Shrey.) You, of course, are free to go watch the routine on YouTube, presuming you are not currently on live television. (Ask mum’s permission first, Master Shrey.)

It turns out that if you’re talking to the financial press, there are a bunch of other words you probably should never use, according to the work of some Swiss academics. Unless, that is, you’re long volatility, then maybe you want to sprinkle these words liberally into your talking points. Hey, if that’s your thing ... judge not lest you be judged, and all that jazz.

Let’s let Rajna Gibson Brandon and Christopher Hemmens from the University of Geneva and the University of St. Gallen’s Mathieu Trepanier explain:

"We find that market irrationality has a signicantly negative effect on subsequent stock market returns -- proxied by the S&P 500 and the Dow Jones Industrial Average -- and exacerbates stock market volatility," they write in a new research paper. "The full impact takes time to manifest with small downturns at first culminating in a significant negative impact after three days followed by a weak reversal almost a week later."

By "market irrationality" they are referring specifically to the types of words appearing in the financial press that, to use some fancy words, may prove to be parlous augers for stock prices. They list 141 words, but some of the favorites around here are "bonkers," "barbarous," "berserk," "daft," "perverse" and "psycho." (Yes, a lot of words beginning with "b," the Greek equivalent of which is "beta.")

Their work finds that excessive use of terms like these can lead to declines in equity market indexes and an increase in the VIX volatility index. They call the reaction "irrationality risk beta" and some stocks are more susceptible to it than others -- to the tune of more than 10 percent annually. The effect is concentrated at extremes -- the smallest and largest firms and those with highest and lowest book-to-market ratios. (The authors used Dow Jones Newswires for the study, which is sort of bonkers but we won’t get all barbarous over it.)

Interestingly, a Google Trends graph shows a huge bubble in "bonkers" around the time our berserk and barbarous market was going all psycho in 2009, so in that case maybe it was a coincident rather than leading indicator.

The Great Bonkers Bubble.
The Great Bonkers Bubble.
Source: Google Trends

Anyway, below is a complete list of words that the authors identified as creating irrationality risk beta. Fingers crossed that printing them all at once doesn’t cause another "quant meltdown." (Tip o’ the hat to the AllAboutAlpha blog for finding this study and to Bloomberg’s Chris Nagi-- noted lover of stocks, cats and @stockcats-- for pointing it out.)

Strike these from your language:

ABERRANT

ABSURD

ABSURDITY

ACCURSED

ALARMING

ANARCHIC

ANARCHY

ANXIOUS

BAFFLE

BAFFLED

BAFFLING

BARBAROUS

BELLIGERENT

BERSERK

BIZARRE

BONKERS

BRAINLESS

BUBBLE

BUBBLES

BURST

CALAMITY

CAPRICIOUS

CHAOS

CHAOTIC

CHILDISH

COMMOTION

CONFOUND

CONFOUNDED

CONFOUNDING

CONFUSE

CONFUSED

CONFUSION

CONTRADICTORY

CRASH

CRASHED

CRASHES

CRASHING

CRAZE

CRAZED

CRAZINESS

CRAZY

DAFT

DELIRIOUS

DELIRIUM

DELUSION

DELUSIONAL

DEMENTED

DEMENTIA

DEPRAVED

DERANGED

DESPAIR

DESPAIRED

DESPAIRING

DISORDER

DISORDERED

DISORGANISE

DISORGANISED

DISORGANIZE

DISORGANIZED

DISTRUST

DISTRUSTFUL

DISTRUSTING

DIZZY

ECCENTRIC

ECCENTRICITY

ENVIOUS

ERRATIC

FANATIC

FANATICAL

FOOLISH

FOOLISHNESS

FRANTIC

FRANTICALLY

FRAUGHT

HAVOC

HYPOCRISY

HYPOCRITE

HYPOCRITICAL

HYSTERIA

HYSTERIC

HYSTERICAL

IDIOCY

IDIOT

IDIOTIC

IGNORANCE

IGNORANT

ILLOGICAL

IMPATIENT

INCOHERENCY

INCOHERENT

INCONCEIVABLE

INCONSISTENCY

INCONSISTENT

INSANE

INSANITY

INSTABILITY

IRRATIONAL

IRRATIONALITY

IRRESPONSIBLE

JITTERY

LUDICROUS

LUNACY

LUNATIC

MAD

MADMAN

MADNESS

MANIA

MANIC

MOODY

NEEDLESS

NEUROTIC

NONSENSE

NONSENSICAL

OBSTINATE

PANIC

PANICKING

PARANOIA

PARANOID

PERPLEX

PERPLEXED

PERPLEXING

PERVERSE

PREPOSTEROUS

PSYCHO

PSYCHOTIC

REASONLESS

STUPID

STUPIDITY

SUPERSTITION

SUPERSTITIOUS

UNHINGED

UNREASONABLE

UNREASONABLY

UNRELIABILITY

UNRELIABLY

UNSETTLE

UNSETTLING

UNSOUND

UNSTABLE

UNWISE

UNUSUAL

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