Internet Message Boards & Chat Room Influence
In 1997 when I ventured out of the social chat rooms to the investment chat sites, I discovered the investment chat sites were even more emotional than the social chat areas. Speculation and conjecture are the primary underlying reasoning to numerous postings. But if you are deliberate and diligent you can locate good verifiable facts and information laced within the ranting. Facts and solid information are merely considered tout or hype. Thus the standard has been established on the Internet.
This was accomplished by many write-ups that have classified people into cyber categories. According to these impression management articles, if you are a positive poster and sharing information then you are a pumper, touter, paid stock promoter, stock manipulator, or just a flat out hypster.. Whereas if you are negative poster, you are a basher, shorter, MM shill, paid stock whacker, or convertible debenture holder looking for the lowest possible price to convert shares, etc. Whereas, if you rarely do either but a neutral bias you are a sheep, moron, fence rider or just flat out dumb money. There is no such thing as someone just sharing information so there has to be a classifiable agenda.
Regardless, the classification automatically comes with the cyber-territory should you dare to share. If you post positive and called a P&D then discover the company you have an interest in just nailed you somehow and dare post that concern you are a S&D. Either way you will be classified and categorized to discredit merely sharing your due diligence. But despite all this nonsense and emotion, the Internet is the wave of the future for information without a doubt.
When I read the various views, opinions and classifications that fall upon posters, I have to laugh because the Internet is purely fabricated impression management. Basically, the Internet is a stage for certain players to play their parts in fictitious roles. They enjoy their roles and adapt very well to the spinning of information. However, though some just enjoy sharing factual information, some just flat out like to cause trouble for no other reason than to stir up a can of worms for the entertainment value. So basically on just about every thread you have a cast of characters from the heroic leading man or woman and of course the bad guy or woman. Reminds me of a Dudley Do Right saga where the company is Nell always getting tied to the railroad tracks by Snydley Whiplash (negative posters) and of course Dudley Do Right (positive posters) come to save the day.
Even the commentary on the trading is colorful and can be done in a bullfight scenario where the Majestic Matadors (Market Makers or Market Influences) are fighting the Bulls (Investors) with the clowns (FUDs & Bashers) running interference to protect the Matadors from the horning Bull. The entertainment value is excellent to say the least.
However, the influence from this fantasy entertainment scenario is growing as people learn more about the market in factual verifiable chat room posts on the companies and the market. The problem is getting to the unemotional facts and real data so someone can organize it thus acquire a real knowledge about the company and hopefully gain a bit of wisdom to make a solid investment decision. This quest for knowledge is growing and the spins are becoming even better written, as the spin-doctors have to adapt their impression management writing to avoid exposed pitfalls from the past.
Even brokers have been known to follow the threads to get a sense on the public opinion for a security. Of course, this is disregarded as nonsense but they actually do. If you ask a broker if they are familiar with a popular internet chat site they typically are quite knowledge of the site. Some even ask who some of the posters are that are posting in accordance with their agendas. I Many brokers even subscribe to popular P&D newsletters with well-written amateur analyst reports. Consensus among the brokers I have talked agree the Internet is a vital resource for information especially posts from the diligent posters.
Not only do brokers and influences in the market but also CEO’s of public companies read the opinions, views, hypes, touts, pumps, bashes, and what not. Most CEOs I have talked to also agree the Internet can no longer be ignored or down played as a ridiculous influence on the market. Most everyone realizes the age has arrived that calling a financial advisor, professional broker, etc, has given way to the stock chat sites. Many a sleepless nights can be attributed to the postings on the Internet for brokers, CEOs, managers, and investors.
The message boards and chat sites were developed and intended to provide individual investors with a means of exchanging information about their investments. However, most have discovered the Internet chat sites have turned into a haven for short-sellers and stock manipulators to wreak total devastation on companies' stock for gain. Especially, smaller companies with illiquid stock or a high concentration of investors are particularly susceptible to vicious rumors and lies.
Thus companies are forced to monitor Web sites for public opinion. What the companies are learning is they need to educate the financial community in order get fair and just opinions to combat the false and misleading information. Everyone is slowing realizing that there are influential eyes to the trading of the stock that do not post but evaluate all the information and sentiment on the chat sites. On nearly every site there is someone that has done the due diligence and can provide valuable insight into the companies’ plans to get a fair understanding of the their goals and address the perceptions of individual investors. Some companies, in fact, are using these Internet chat sites to improve their investor relations.
I, for one believe, that investor relations in the future will start becoming more involved in the chat sites for the main reason to keep the investors informed. Most Investor Relations are discovering the telephone is not where investor go today but instead head straight to their favorite chat site. Thus the misconceptions of both positive and negative are read and evaluated as to what to believe is the truth.. In order for investor relation information to return to facts instead of conjecture and speculation, investor relation representatives are not going to be afforded the comfort of not posting on line to inform shareholders if they are going to be competent in their position. Some have started their own live chat sites to save the investor and the company the cost of a dime.
Emails that are sent out by an IR most of the time make it to the Internet chat sites anyway. One significant future development that is slowly coming about is the IR can address certain concerns and thus cause the thread to be more in line with what is actually going on with the company. One popular misleading scenario is the selective interpretation of company press releases.
The Internet chat is infamous for Purposely Omitting or Adding Syntax (POS/PAS), which every is required to meet the agenda of the poster. When someone corrects the spin this of course complicates the runners, pumpers, shorts and bashers who make a gain on false speculation, negative spins, convenient interpretation and artful entertainment at the company’s expense. By addressing the concerns of investors, the integrity factor increases because the IR has to be accountable for they information, thus an IR is not so bold to post false and misleading information.
This is the age of information and with that comes imminent change. Companies are going to have to face and address the Internet. With the new fair disclose rule they are going to have to keep more information in the form of an organized summary for investors to have available to review and consider in making their investment decisions. There is so much more that is available in the form of material events than comes out in the filings that is lost like real media write-ups on the company. In the future we could see a charge made against an investor relation representative for allowing an Internet rumor, negative or positive, to take on a state of being a fact. Especially, if the stock turns out to being nothing more than a hoax on investors.
Take the infamous Internet driven IOMEGA or worse Bre-X. Where was the investor relations representative that should have been active to keep the Internet information factual? A lot of the Bre-X Minerals gold scandal was warred over the Internet stock chat sites. Positive investors defended, while negative investors argued the merits of the claim to have struck gold in Indonesia. What was even more astounding was news reporters were watching the heated discussions on the Internet chat sites for the latest developments. Especially those posters that were actually doing the research for them and willingly sharing the information. What’s the old saying, “News at Eleven!”
The influence of Internet chat sites has caused many a public stock to become subject to volatile swings by select group that know how to play the swings. This will continue until the companies decide that they have to address the concerns and the rumors of the Internet chat sites. If they do not then the influence is not coming from the company but rather from a stock manipulator.
Credibility would be at its highest if an IR did participate in the online discussions. But most do not because they would have to disclose their compensation. Worse yet, some IRs do not wish to get into the ridiculous burdensome task of dealing with the disgruntled, stock manipulators and gurus. Their entire livelihood would probably be brought out and used to discredit them. Name calling would be part of it like “momentum buster” or “thrill killer” because the facts would counter the hyped rumors.
However, other IRs who realize that getting the factual information out to the investors on the same influential plain is far more important than ignoring of the stock manipulators, typically are more respected, which helps themselves and the companies they represent. Good solid non-insider questions can be handled efficiently and effectively, which nails the information spinners. An IR is better informed and their primary responsibility is to present the facts. Plus an IRs input is unmatched and far more focused towards the real facts. The more facts and information companies make available, the less likely investors will fall for the convenient rumors and conclusions of the infamous unknown, unaccountable poster. Facts have always messed up a good story or rumor.
The bottom line is the Internet is a major information influence on the stock market. Also the stock chat rooms are not going away. The problem that companies are going to have to face is that ignoring the influence of the Internet does nothing but allow investors to fall for the agendas of other unknown posters instead of factual information about the company.
Hey just my opinion and I could be wrong!
Gary Swancey
