Now that we've survived the dotcom boom, we all own our own domain names, and we've become accustomed to file sharing, we can get back to the roots of the internet: communication. Though the communication methods on the internet can be wide in range - from newsletters, to podcasts to blogs - it's the accuracy and credibility of the content producer that determines the legitimacy of the content itself. One of the oldest forms of internet communication, the message board, continues to thrive.
Topics up for discussion on message boards are diverse and all-encompassing, from knitting to politics and, in this case, investing. The information available on investing message boards can certainly be beneficial to investors of all skill levels, but we have to remember to consider the sources. Just because something is published is no reason to assume it's worth reading.
Message Boards 101
Many message boards focus on a specific topic or group of topics, and allow readers to interact with people who share similar interests or have specialized knowledge in a particular field. The main function is to provide a forum where readers and users can share their thoughts. (Find out how to spot internet fraud and protect your hard-earned money in Avoiding Online Investment Scams.)
Finance message boards are often flush with hot stock ideas and valuable tips and information. However, when considering the source - and understanding that many message boards are hosted, maintained and receive content from private citizens - ulterior motive can often come into play. Much like insider trading, erroneous message board information can have an effect on stock prices, and weeding through the misleading "tips" can be daunting. (Learn more by reading How does a pump and dump scam work?)
Digging for the Gems
There are some common factors to watch out for when analyzing message board information and its source. Look for individuals who are blind to opposing views. Such "posters" can seem to have insight into stock patterns, but may be up to little more than attempting to skew opinions for personal gain. Also, message board posters with an ulterior motive may make calculated appearances at a critical juncture. By glossing over facts and citing other questionable sources, attention can be diverted from the real issues at hand. (Some misleading facts may include ratios such as P/E, ROI and dividend yield. Learn how to check these in Analyze Investments Quickly With Ratios.)
What Makes a Poster Believable?
Obviously, it can be difficult to confirm credentials and legitimacy on the internet. However, one of the benefits of the internet is the ability to put on your detective's hat and do a little snooping. Credible posters often make their identities known, and provide links to their personal websites, business websites or personal resumes. Also, legitimate posters will often focus on facts or provide unbiased sources to back up their comments or information. (Turn frustrating hours into profit-turning minutes by managing your investing time properly. See Five Quick Research Tips For Busy Investors.)
It's also vital to understand that there are frequently naysayers on message boards - individuals who will take an opposing position to other posters, and may become quite hostile in trying to sway others' opinions.
For example, message boards that revolve around stock trading ideas sometimes include individuals who will put down a company, regardless of how well it performs. Conversely, some individuals tout the qualities of a certain company, regardless of how dubious that company's outlook might appear.
Also, while message boards can be a terrific resource and a great educational tool, it should not be the only tool that's utilized. If an individual were to pick up stock ideas or tax advice, it probably makes sense to talk those ideas over with a professional before acting on them. (For more on doing your own research, see Stock-Picking Strategies: Fundamental Analysis.)
The Bottom Line
The internet is filled with message boards that cater to general discussion, and those that cater to topic-specific subjects. Both have the potential to enlighten or entertain readers and posters. However, participants on such sites should understand that erroneous information may be hidden in even the most credible of sources. Carefully weeding out the legitimate opinions and analysis of investing and trading sites can be a task in itself, but that's the job at hand when trying to untangle the world wide web
Investing NewsBloomberg has dominated the financial information industry since forever. Will Symphony be the company to finally knock Bloomberg off its perch?
Investing NewsCondé Nast and Hearst are converting potential loss into opportunity by adapting to the digital age and transforming their products and operations.
InvestingWith so many talking heads to choose from, which is the right show for your business and money matter needs? We review the best shows on now.
InvestingHere's how Rupert Murdoch turned a small family newspaper company into two separate multibillion-dollar media conglomerates.
InvestingWith their eye-popping valuations and investments, new media startups are hot. But why are legacy media organizations interested in them?
MarketsObtain information on the popular news digest newsletter, theSkimm, and understand how email newsletter publishers generate revenues.
Investing NewsJeb Bush is the younger brother of former President George W. Bush and one of former President George H. W. Bush’s sons. Jeb was the Governor of Florida during the 2000 Presidential election ...
InvestingAccess to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
InvestingMotley Fool and TheStreet.com provide financial news and other investment services, but each has unique traits that will appeal to different users.
InvestingAs part of a series comparing popular finance websites, Investopedia conducts an unbiased review of MarketWatch and Bloomberg.