My first post here and it's not going to be a positive one, but hardly will it be directed at the posters here, but at another site.
Today, I received an e-mail from the moderator of a popular stock picking site (one that is not on investorshub) about a small oil and gas stock. At first, I was pleasantly surprised and pleased to be singled out in that way. This was the first time I had received an e-mail from the moderator, and I have been posting in that room for many months. I read the e-mail message and it looked like a reasonable reason to trade a stock.
I paused a moment and looked at the chart, and noticed that the stock was very low volume, and was afraid that if I entered it, I would not be able to get out of it. So I just chalked it up to another dumb idea from a poster in a chat room and moved on to other hopefully better trades.
Less than 5 minutes later, the moderator of the group posted this stock as the "pick of the week" (or whatever), and volume poured into the stock. It was up more than 20% in very short order -- less than 15 minutes. Another poster in the room congratulated the clever moderator for such an excellent pick.
For a moment, I thought about how foolish I was not to take the moderator's e-mail more seriously. But within 15 minutes, the volume had dried up, and within an hour, this stock had retraced and lost virtually all of its gains.
I paused for a moment and thought, well, ok, I ought to enter it now, this is clearly a stock that people want. What a gift now that it has retraced and I can enter...
AND THEN I STOPPED and reminded myself that this is a low volume stock and it was not at a support level on a down market day and why the hell should I buy that??? I PASSED.
What did I learn here? A lot. Many suspicions were confirmed. On many levels. But the e-mail really bothered me. What was the intent of that e-mail message?
1. Was this person trying to help by suggesting a buy on the stock before he posted it in the main room? If so, that would be a nice bit of early information we all want before a stock has its run.
2. OR, was the moderator already in for a full position and was really encouraging me to BUY his shares that he would be ready to sell once he posted his pick and buyers started coming along? After all, the e-mail and then the "BUY NOW" post arrived within 5 minutes time.
After careful consideration, I think the answer was the latter. This is very discouraging. Had I bought, I would be sitting on a crappy, low volume microcap stock with probably no hope of selling it to anyone.
This other site does have a nice way to search across many different message boards (not including investorshub, by the way) which is a feature I like. I also used it as a way to help a select few friends keep up with stocks I play. And I used it as a place to keep up with some information about stocks I was interested in. I took time to highlight the posts of a few members in that room so that their picks would be in a special color to call attention to their picks so that I could evaluate them quickly. Those were all nice things. But there is a definite down side to these positives.
All I can say is this: beware those bearing gifts.
I am looking forward to reading and contributing in a new environment. Perhaps I will be welcome here. But either way, I thought I might share this experience.
happy trading 2 u.
