Competitive Companies Inc. (fka CCOP)

[LGL8054]

From another board... but worth the read...

Posted by: charhorse

Date:7/5/2007 7:52:27 AM
Post # 2472

Who Should I Listen To?
Something that is frequently considered, but rarely discussed, when it comes to public message boards like this one is which posts are really worth consideration. The discussion is rarely held (probably because both sides will end up screaming that the other is wrong, and those with no opinion will stay out of the conversation). So really, who should one listen to?

I believe that the messages that people post (when they are on-topic, anyway) tend to fall into two categories:


Messages from people who are looking for information and opinions
Messages from people who are sharing information and opinions.
Lets start with the first group - Messages from people who are looking for information and opinions.

In my opinion, these messages are the ones that result in the most "gems of knowledge". I have frequently found that other people ask questions on topics that I haven't even considered. These questions have driven me to look for answers that sometimes influence my opinion on the trade that I am holding or considering.

Note an important point that I am making here though. The questions have driven me to look for my own answers. Obviously, I will also look at the answers posted by those who are in the second group, as will most people. However, one should never base their choice to change their position based solely on other people's answers. More on that in the next section of this post.

Then the next group - Messages from people who are looking to share information.

This is the group that is most interesting. I don't categorize these messages based on content; I categorize them based on the author. So what are the types of authors that post messages to share information and opinions? I believe that there are (generally) four types:


Stock Pumpers
Stock Bashers
Analysts
People with little or no clue, but have jumped on either the Pumper's or Basher's bandwagon.

Each of the first three types of people can bring value to a message board, but it is important to be able to understand the perspective from which they post their messages. My thoughts...

Lets start with the last group, since they are the easiest to recognize. People with little or no clue, but have jumped on either the Pumper's or Basher's bandwagon are frequently new investors/traders. They may or may not have taken a position, and they tend to add very little value to any conversation. Messages from this group of people are generally recognized by what appears to be blindly following and agreeing to messages from those who share their investtment/trade opinion, but offer no new insights. They may or may not resort to name calling and/or profanity but the bottom line is that they offer no true insights, or even any good questions, to a discussion. I call them Sheep.

Now lets get to the group that most posters seem to love... the Stock Pumpers. Personally, I believe that this is the most dangerous type of poster on any investment/trading website. The Stock Pumpers quickly build up a loyal following and they (along with their "flock") are quick to criticize the two remaining groups who may post messages that conflict with their "pumping" messages. Stock Pumpers never, ever, ever ever post any messages that criticize the company or the stock movement.

Why do I feel that Stock Pumpers are the most dangerous type of poster? The answer is simple actually. Retail investors / traders (long or short) really have no impact on the PPS of a stock. They do, however, affect the choices that individual investors and traders make. Obviously, no one should make an investment choice based on comments that they read on public message boards, but lets be honest... people do. I have made that mistake in the past, in my early days of trading, and I would be really surprised if any seasoned investor or trader could honestly say that they have never been influenced on a trade based on someone elses opinion.

Now, most investors and traders don't start out by going short on stocks... they start out by going long. So who are these Stock Pumpers influencing? The seasoned investor/trader? The Instituional investors and hedge funds? Or are they influencing the retail investors? The answer is obvious to the seasoned traders, institutional investors, and hedge funds... but if you're not in one of those categories, I will answer the question for you: The ones who are most influenced by Stock Pumpers are the retail investors - especially novice investors.


Why are retail traders/investors (especially novice traders/investors) influenced by Stock Pumpers?
The answer is primarily psychological in my opinion. When one takes a position (bullish or bearish), there is a "support group" mentality that takes place. Humans are, after all, social creatures... we like it when others agree with us, and we dislike it when others disagree.


Now the Stock Bashers... the group everyone loves to hate. I would first like to offer this piece of advice - if you are holding a bullish position, do not ignore the Bashers! Like Stock Pumpers, Stock Bashers are easily recognized by the fact that they never... never ever ever... post anything postive about the stock. The difference is that they will sometimes offer pieces of information that, after you do your own research, might make you re-consider your position.


Why are Stock Bashers generally unable to influence a stock price?
Again - it comes down to who really drives the price of a stock. Is it the retail investor? No, it is the institutional investors and hedge funds. If you believe that messages posted on a public financial message board are influencing the stock that you own, then you are either fooling yourself, or you have chosen an extrememly bad stock.


Now the last group - The Analysts. One might think that this group would be easy to recognize because their questions and comments would always be neutral. That is a fallacy of logic. Analysts typically post messages that clearly illustrate their opinions and/or concerns... depending on the stock, this may mean that they are bearish for a long period of time and slowly change their positon to bullish as a stock shows strength. Of course, the inverse is also true.

The Analyst is typically interested in both sides of a stock position (and frequently takes a perspective that is contrary to their actual position). This poster can be recognized by their ability to evolve their opinion from bullish to bearish and from bearish to bullish. They will typically engage in conversations with both bears & bulls (including bashers and pumpers) to aid their own analysis and further their own due dilligence.


Does The Analyst drive the investor or trader decisions?
The Analyst probably has the least public impact on any stock. The Analyst is looking at the message board to learn about other key data points to further their own due-dilligence. They tend to catch the wrath of Stock Pumpers, and the Sheep that follow the Stock Pumpers., when they are bearish. They also tend to catch the wrath of the Bashers and the Sheep that follow the Bashers when they are bullish.



Though, probably the least popular of any group, The Analysts are the ones that deserve your attention.
Remember, the stock market isn't a game of popularity... it is a solo exercise that will allow investors and traders to either make money or lose it. If you are interested in being popular, go back to college or high school where being part of a group mattered.


I hope that these thoughts are useful to someone... these message boards can be confusing sometimes and I think that is important to understand what one is reading and what it really means to their investment / trade choices.