I stole this from the KAHI thread. Interesting read.
The following excerpts from Individual Investor, vol. 12, no. 5., “Navigating Stock Message Boards: Proceed With Caution” may be of interest:
- Too much “pump and dump” (the practice of raising interest in a stock so that you can sell it when the price goes up). It runs from the honest, if mistaken, cheerleading of current stockholders to the deliberate exaggeration and plain lying of traders who are long or short the stock. The law is not very clear here when it comes to individuals (as opposed to brokers), and intent is important. Deliberate misleading, if it results in someone's loss, would likely be the basis for a civil suit, but proof of such intent would be difficult.
- Naiveté among message board posters. Unknowledgeable investors distort the balance. One of the problems an individual has in evaluating Web content is that frequency of an argument may give it more perceived importance. If 10 people repeat the same positive aspect of a particular stock, it seems more important than the single aspect itself. On some message boards, multiple aliases are permitted, so the seemingly 10 opinions might be coming from one person. |
