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CHAT ROOMS AND BULLETIN BOARDS

My motto on chat rooms and bulletin boards is: "STOCKHOLDER BEWARE".  They can be a good source of information, but also can be a place to spread fear and hype.  Here is a list of different types of posters you will see on the  bulletin boards.

DOOM AND GLOOMERS

Some reason why Doom and Gloomers post:  

  • 1)  The poster wants the stock price to come down so they can buy the stock for a lower price.
  • 2)  They have "shorted" the stock and therefore want the price to drop lower. 
  • 3)  They are honestly expressing their opinion.

Common techniques used by the negative posters number 1 &2 above include:

  • A)  Planting seeds of doubt.
  • B)  Applying fundamentals or formulas that do not necessarily hold true to the stock you own.
  • C)  Over-emphasis of a competitor's strength.
  • D)  Stating deceptive facts and reasoning such as insider selling to cause panic selling.
  • E)  Posting half-truth articles that focus only on the negatives, but ignore other positive analysts comments or research. 
  • F)  Generic negative posts such as:  "This stock is junk", "this stock will never go high again", etc.

Never sell because of the "negative poster panic syndrome".  Negative posters thrive on the fact that it is easier to scare a person into selling than it is to convince a person to buy.   If your stock has performed well in the past and nothing fundamentally has changed with the company or it's competitors, it will probably continue to perform well in the future. 

Weaker or smaller companies do not automatically mean failure with a certain stock.   ETEK was a smaller company that did very well (about 600% gain in one year) even though it was competing against the more dominant JDSU.  JDSU ended up buying ETEK and stock price shot up about 70% in a matter of 3 days.  The funny thing is 2 months earlier there was a huge amount of insider selling.

Sometimes negative posters are correct in their analysis so it is important to research and make your decisions based on the "big picture".

HYPE OR "PUMP & DUMP" POSTER

Basically does the same thing as the Doom and Gloomer above, except the opposite.   I would not worry about the Hype or Pump and Dump poster unless you are short on a stock.  Just make sure those posters do not blind you from reality.

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Please e-mail me if you have any comments or picks you think will be quality performers that have a market cap with at least 200 Million.