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Stock Market Forums - The Pros And Cons
Most people who have an interest in stocks and shares have probably come across stock market forums and bulletin boards at some point. They can be used for talking about individual companies or investing in general and can have their benefits, but there are also a few drawbacks as well.
Lets discuss the drawbacks first of all starting with the obvious one and that's the fact that they are a haven for rampers. These are basically people who post positive information about a company that they own shares in, which may or may not be true, in order to encourage forum members to buy shares and push up the share price. This is something you should always be very wary of when reading these forums and you should certainly never buy shares on the basis of what you read on a forum.
A similar problem is that when reading forum postings on various companies, you can never be sure of the accuracy of the information posted, and whether or not there is a hidden agenda. For example, it's very easy for someone to come onto a message board and comment that they have good information that Company X is in deep financial trouble and about to issue a profits warning. However there is no way of knowing if this is true or not. They may simply have a large short position in that stock and are desperately trying to force people to sell and drive the price downwards.
With all that being said, there are, however, some positive aspects of financial forums. The main one is that you can learn a lot from the minority of experienced professional investors who frequent these forums. If you spend any amount of time on these forums, you will soon learn who these people are. They generally post useful information whenever they post comments and have a proven record of making excellent investments. Furthermore you will never find them ramping up their shares either.
You can learn a lot from these forum members so you should pay attention whenever they write a new post. They will usually have an excellent track record and will usually be able to give you some helpful tips and advice if you are polite to them and ask nicely. Remember the information they post on these forums is completely free so try and take full advantage of this fact.
So although stock market forums do have their fair share of rampers, if you can ignore all of these jokers and only pay attention to the experienced forum members, then they can be an excellent educational tool.
About the Author To learn more about some of the most useful stock market investing tools and resources, please read James Woolley's Marketclub review and ADVFN review. |
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