Investment Forums

Electronic “Investment Forums”, aka “bulletin boards”, “discussion forums” etc constitute a useful resource for likeminded investors to exchange views and report news. They are also a good place for posing questions and, sometimes, for learning from skilled investors. However, treat with caution! In some forums there is much “noise” and meaningless chatter, which can harm your investment performance by distracting you from the matters that really count. There is a good article and discussion on this here. Bear in mind that many posters post anonymously (sometimes for perfectly valid reasons, such as privacy) so one should be wary of their credibility. Over time, however, you tend to learn which posters can be trusted and which not, from the depth of content and supporting evidence for their posts.

Avoid comment focusing on short-term share price movement: no one can predict that with any accuracy, likewise anyone claiming to have non-public (inside) information should be treated with deep suspicion. If the information is true, they are committing the offence of market abuse by disseminating it unofficially, conversely, if not true it is also market abuse, by deception. Either way, they are attempting to do something illegal and should not be trusted. Of course, if non-obvious information concerning an investment is referenced to a reputable source, e.g. a newspaper, that information is public and there is no problem with disseminating it. Such references are often useful and enhance the credibility of the poster.

Another pitfall to be wary of when using forums is that they can lead to “groupthink” or “confirmation bias”. Discussion on a particular company will tend to be dominated by enthusiasts for that company, meaning that the focus tends to be on the bullish points favouring investment in that company. A shrewd investor, however, should consider the negatives as well as the positives. Posters pointing out such negatives are often shunned, ridiculed or assumed to be malicious by others involved in the discussion. Instead, their alternative points of view should be welcomed and considered – as long as backed up by evidence (the same applies to positive comment). It is healthy to have a balanced view of potential risks as well as rewards.

A number of widely used forums are catalogued below. Each has its own idiosyncrasies, but by giving them a try you can discovered which, if any, you find useful (click on the logos to try the sites). You may have to register with a site (free of charge) in order to access discussion content.

Most of the discussion on Stockopedia centres around Paul Scott’s daily “smallcap value reports”, in which daily news around smallcap companies is analysed and discussed. The standard of discussion and analysis is generally quite high and can be rather useful in identifying potential investment opportunities.

In addition, numerous articles are posted on a variety of investment themes. The site’s editors tend to focus on quantitative investment methods. You can filter the discussion theme to focus on topics or companies of interest to you.

Stockopedia discussion can readily be moderated, which helps to ensure that the discussion (generally!) remains civilized and pertinent.

The “Free BB” section of the ADVFN site contains one of the most comprehensive discussion forums for UK investors. The discussion is heavily oriented around individual companies, accessed by entering the company’s ticker in the box next to the “EPIC” button and then pressing that button. There is at least one dedicated discussion thread around pretty much every listed and quoted UK company. Beware though! The discussion is virtually unmoderated and the quality of much of the discussion is low. In fact, a very active discussion around a company can be a contrary indicator, suggesting that it is attracting inexperienced and speculative investors. Conversely, a paucity of discussion may suggest that a company is being overlooked and may be worth further investigation.

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