It was well known that Gandalf was 'hiding up in the Bag End.'

Haha, I can empathize. For some actual thoughts to add: well, Gandalf's nature as a wanderer and a wizard naturally shocks hobbit sensibilities, making him an easy subject of gossip, especially since he won't just pass through or stay away, but stays *in* and influences otherwise upstanding hobbits to scandalous adventuring! On the other hand, those who actually get to know him always like and trust him.
 
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