Investors get their investment ideas and stock tips from hundreds of places. Some are smart and do their own due diligence while others rely on the prowess of others. There is nothing wrong with listening to other people when looking for great stocks. There are a lot of smart people out there that can be valuable resources in your investing journey. However, there is one place that I would avoid like the plague: stock message boards.
Good Idea, Bad Reality
Message boards have declined in popularity since the halcyon days of the internet bubble, but they are still there and plenty of people roam around and post garbage daily. I stopped visiting them completely several years ago, but recently went to a few on Yahoo! Finance after increasing my trading activities. After reading some of the posts, I realized that some things never change.
There are two groups that dominate these boards: super bulls and crazy grizzly bears. There is hardly ever any intelligent discussion whatsoever from either side, which is unfortunate because there is the potential for an educated exchange of ideas from both sides. The bulls claim “XYZ to the moon!” or “buyout coming soon!” The bears say things like “HAHAHAHAHAHAHAHA, YOU ARE ALL DUMB BAGHOLDERS!” or “this one will hit $0 soon.” These are actually some of the more civil statements. The rest are personal and racist attacks.
Pump and Dumpers
Unfortunately some people act on some of these ridiculous comments, especially when a spammer comes on the board of an established company touting a penny stock. I wouldn’t think that somebody would put their hard-earned money into an unknown penny stock being pushed by somebody they will never meet, but it happens daily. These pushers are dying for you to buy so they can sell. This is known as a “pump and dump” and many small investors fall prey to such scams.
The bottom line is the best case scenario of visiting message boards is a waste of time, and the worst case is to be taken for some serious money. There is so much useful investing material on the internet that it is a shame people waste their time on message boards. Don’t be one of them.
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