Re: 6/20/00 - Bashers: The Terrors of the Internet
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Bashers: The Terrors of the Internet
By By Brett Hainley
Published by OTCNN.com
06/20/2000 11:16 AM CST
The Internet is a marvelous thing. “Due diligence” is no longer a phrase for brokers and market makers whose quick access to otherwise difficult-to-find files gave them an advantage over the small investor. Direct access to databases at the Securities and Exchange Commission, and the US Patent and Trademark Office, as well as the Copyright Office and company web sites has opened up a new world of readily available information for investors. Investor message boards and chat rooms hosted by such services as Raging Bull and Yahoo! make the sharing of such information with one’s fellow investors as easy as the touch of a button.
But with all its glamour, the Internet, and especially those oh-so-convenient message boards, can be hazardous to the unwise or the unwary. In those areas, the small investor often finds his faith and his company’s good name besieged by bashers – people who use the anonymity provided by the Internet to wage private wars and attacks against companies and, occasionally, other people. Their reasons are many and varied. Some are disgruntled former investors or employees of the company, wishing to spread their misery to others. Many are just trouble-makers, people who, for what ever reason, feel the need to attack and undermine others. And a few are actually paid by individuals or even market makers to assist in illegally and artificially reducing and suppressing the value of certain stocks.
This unfortunate situation is doubly bad for investors in OTCBB stocks. Since OTCBB companies, are, for the most part, development-stage companies, bashers hurt small investors in two ways. First, they strike at the investors’ confidence in the company’s management and direction. Most small investors in OTCBB stocks are long term investors, and, for them, confidence in a company’s management and potential for earnings is paramount. They can usually tolerate a few minor dips and slides as long as they feel confident that management will once again, get the ball rolling.
Bashers strike at the core of this relationship. They often attack company press releases as being propaganda. In one message base on the Raging Bull, a basher suggested that he had visited the company’s new construction site, and that no one there had ever heard of the company. Never mind that the company had never released anything but the most general information about the site.
Possibly the most destructive means that bashers use to undermine the relationship between investor and management, however, is their flagrant use of direct and indirect personal attacks. The same basher who claimed to have visited a company’s construction site also claimed to have met with the company’s new CEO, where, he claims, the CEO drunkenly declared that, since he could not sell his stock for another two years, he didn’t care how the company did. The CEO challenged the basher, denying the claims and inviting the person to meet with him in his office. Personal attacks can get terribly out of hand. Attacks against Talk Visual Corporation’s (OTCBB: TVCP) Chairman, Michael J. Zwebner became so bad that he finally filed suit against several of the bashers, alleging defamation and intentional infliction of emotional distress.
These attacks have another ill effect on small investors. OTCBB stocks are, almost by definition, low-value stocks. The effect of even a few cents drop on many of these securities can result in a high-percentage loss on an investment. Day-traders, and other investors seeking a quick return, are often unduly dismayed by the apocryphal allegations of these bashers, and, in response, have been known to sell off shares at low bids, seeking to receive some value from what they have been led to believe is a bad investment.
How, then, does one minimize the damage done by these dealers in half-truths and unwarranted attacks? The first thing is to take everything one reads with a big grain of salt. The Washington Post’s “two-source” rule applies well here. If someone provides negative or disturbing information about a company, ask for a source, then check it yourself. The source may be erroneous or obsolete. Most news sources publish periodic updates to their stories, especially if new information alters the information held in the original story. SEC filings are generally classified by date and type. Check the company’s most recent filings, both the quarterly and the annual, and be sure to read the “Management’s Discussion and Analysis” (MD&A), which often can explain the company’s operations in a way that the raw data can not.
Another way to deal with bashers is to simply ignore them. Since many bashers are merely trouble-makers and not professional defamers, they will usually go away once they see that their words have no effect. They can also be avoided entirely, many investor groups have a “Long” version of their company’s message base, where only verified reports may be posted and bashers are subject to special Terms of Service.
Most of all, don’t argue with bashers. All that will come from that is a headache.
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