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.)

Negative Impact
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

Related Articles
  1. Investing News

    How Symphony Plans to Take on Bloomberg

    Bloomberg has dominated the financial information industry since forever. Will Symphony be the company to finally knock Bloomberg off its perch?
  2. Investing News

    Hearst and Condé Nast in the Digital Age

    Condé Nast and Hearst are converting potential loss into opportunity by adapting to the digital age and transforming their products and operations.
  3. Investing

    The 8 Best Business and Finance T.V. Shows

    With 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.
  4. Investing

    How Rupert Murdoch Became a Media Tycoon

    Here's how Rupert Murdoch turned a small family newspaper company into two separate multibillion-dollar media conglomerates.
  5. Investing

    Why Is Old Media Interested in New Media?

    With their eye-popping valuations and investments, new media startups are hot. But why are legacy media organizations interested in them?
  6. Markets

    How TheSkimm Works and Makes Money

    Obtain information on the popular news digest newsletter, theSkimm, and understand how email newsletter publishers generate revenues.
  7. Investing News

    Who's Funding Jeb Bush?

    Jeb 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 ...
  8. Investing

    Financial News Comparison: Bloomberg Vs. Reuters

    Access 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.
  9. Investing

    The Motley Fool vs. TheStreet: Which Is Which?

    Motley Fool and provide financial news and other investment services, but each has unique traits that will appeal to different users.
  10. Investing

    Which Is Better For Me: MarketWatch Or Bloomberg?

    As part of a series comparing popular finance websites, Investopedia conducts an unbiased review of MarketWatch and Bloomberg.
  1. Who actually owns the Wall Street Journal?

    The Wall Street Journal is owned by media magnate Rupert Murdoch, who purchased the company for $5 billion in 2007 through ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  2. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  3. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  4. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
  5. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the legal sense may also refer to an exemption from liability ...
  6. Discount Bond

    A bond that is issued for less than its par (or face) value, or a bond currently trading for less than its par value in the ...
Trading Center