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To: marcos who wrote (2193)	5/6/1999 8:45:00 PM
From: Clark Kent	Read Replies (2) \| Respond to of 2401

OT but a good read.... stockhouse.com LETTERS TO ED: Diary of an Agressive Online Message Poster Miami, FL, May 6 /SHfn/ -- Dear Editor: First, a bit of disclosure. I'm a primary poster on a "hot" message board on Yahoo. I fit your Red Flag list as a paid promoter, but I am not. I am someone with an admittedly overdeveloped interest in a company because my portfolio is overly weighted in the stock (85%). I am typically first to comment on news. I am typically the first to counter irrationally negative or outright false statements by a rather organized and exceptionally effective group of shorters. But, that's not why I'm upset with your article. Hell, I've been accused of being a paid shill for months. Posting an e-mail in my profile helped as did getting to meet many of the other posting shareholders at the company's annual meeting. Fact is, you are making the same mistake that the SEC and Congress are when it comes to identifying dangers to independent investors. You focus on pump and dump artists and paid shills. While there are certainly many of those present on message boards, simple due diligence will uncover most shaky companies and stop losses will do the rest. In reality, most people who fall for pump and dumpers deserve to lose their money. You devote one poorly defined flag to the more prevalent and more sinister posters on the message boards; those people I have come to know as slam and shorters. Slam and short artists are similar to pump and dumpers, but their job is easier. Why? It is far easier to convince someone (or at least more someones) to sell a stock through made-up rumors than it is to convince someone to part with money and buy a stock. The market is filled with uncertain investors. Often, one nasty rumor pushes them over the edge. The slam and short artist m.o. is pretty obvious. Usually running in packs, they identify a stock with recent slightly negative news and/or that is beginning a downtrend technically. About a week or two before the target date, they start showing up on the message boards spreading half-truths and innuendo. Often, they begin with innocent-sounding enough questions that turn into accusations later. In this two-week period (usually beginning after the middle of each month to avoid the current month's short interest disclosures), they begin entering their short positions. On a pre-determined day, they hit the board with some malicious rumor that usually has little, if any, basis in fact. A classic add-on ploy is to quote the 10-K statement where the company's lists all the reasons, no matter how remote, how the company might fail. They use multiple posting names and hit the board for 2-5 days and then disappear. They will typically close out of their short position at that time, or follow the now damaged stock down with stop-losses until it bottoms letting stop losses, confusion, and margin calls do the rest of the damage. If they smell blood, they may press farther and devote more time and resources. A good example of this can be seen in Labor Ready (of which I have never owned shares, never have been an employee, and have never posted on their board) Labor Ready's current ticker is LRW [NYSE], but they were previously known on the NASDAQ as LBOR. In the middle of a routine pullback from a 52-week high, the scenario I described above happened to LRW. Rumors about the CEO's arrest and assertions concerning fraud surfaced on the Yahoo and SI chat rooms. The stock absolutely tanked, despite the fact the company denied all rumors very soon after. Margin calls, panic selling, and triggered stop losses all contributed to a huge drop in price. The slam and shorters were also well funded and very aggressive in their attacking the stock. If you want to see how they did it, pull a tape of the week-long price action back in August 1998. Pull up any price chart and you will see exactly what day the attack was triggered. Look at the prevalence of small size trades at the bid and below the ask. The shorts ran the price down with heavy selling action in small increments, broke the false news, and hit the stock again with heavier selling over the next day. A few days later, the initial shorters were likely out of the stock or at least hedged. Labor Ready moved to the NYSE to avoid some of the bald-faced manipulation that was occurring in those days. Throughout, they posted consistently good fundamentals, but only recently has the stock recovered. I find slam and short artists to be much more prevalent on boards these days than pump and dumpers. It is relatively easy to identify these occurrences after the fact as well: (1) Increase in the short interest for the month after the price drop (2) No obviously horrible news or bad news blown out of proportion (3) Significant rise in the number of chat board posts per day beginning about two weeks before the event. (4) The most negative posts coming from newly-created ID's (although this is changing) So, I think your Red Flags paint too many "real" posters with a negative brush and exclude a whole camp that investors need to be made more aware. For those of us who have been hit with such an attack, we certainly know what to look for. Perhaps our efforts in Congress and with the SEC will lead to new short interest holder disclosure rules, more timely short interest reporting byt the exchanges, and the adoption of special regulatory units to ferret out this particular activity. Until then, you can help do investors a service by pointing out this disturbing trend. Sorry if my words ring too harshly. As you can see I'm fairly passionate about this subject. Thanks for the opportunity to respond, (name witheld) StockHouse: Your thoughts are well received. The Rapid Response Team debated the Flags for hours. We perfectly understand that all of those characteristics, especially as stand alones, do not perfectly deem one to be a "scammer" but, our hope is to arm online investors with some guidelines... things to look for... to assist them in evaluating all the tremendous amount of online information they absorb on a daily basis. Share your comments with StockHouse editors. Email "media@stockhouse.com"