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How do investors use information from message boards to formulate decisions?


farnamstreet
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JaeHong Park, Prabhudev Konana, Bin Gu, Alok Kumar and Rajagopal Raghunathan conclude that investors use stock message boards to seek information that meets (rather than disproves) their prior beliefs. Prior studies accounting and finance suggest that virtual communities often provide more accurate information than analyst forecasts. For example, early evidences of Enron collapse from accounting tricks were first reported in message boards.

 

http://bit.ly/aP5hRO

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Often message boards are just plain wrong, or worse intentionally deceiving.  Our old friend Brolgaboy dragged FFH through the mud for a few years based on twisted tidbits of fact combined with innuendo.  Read this garbage for entertainment, but do your own research!

 

SJ

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Guest Bronco

I use message boards (this one) for idea generation.  But I make my own decisions based on my own criteria and analysis. 

 

Once in a while you get a great idea and you can focus on it. 

 

For the most part, Yahoo message boards are a cirucs, although sometimes you get an intelligent post.

 

 

I got the SNS idea from this site - invested in, made money, and then realized what a joker the CEO is.  I think you always need to revisit why you own a stock and if the fundamentals change.

 

Unfortunately, at SNS that fundamentals are great but you have the CEO saying he will take all the profits!

 

 

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I use message boards (this one) for idea generation.  But I make my own decisions based on my own criteria and analysis. 

 

This. 

 

To my own financial detriment I didn't buy Fairfax a few years back around $90 when so many on this board (the predicessor actually) were pounding the table on it's value.  I hadn't done enough of my own research to understand what made Fairfax tick, so I reluctantly passed.  I have since mended my ways.

 

I agree with the point that message boards can be an effective echo chamber one way or the other, which can lead to significant confirmation bias.  On the other hand when a sesible person (or people) on a good board says something I disagree with, I certainly try to take the hint and give the issue more thought. 

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Guest dealraker

I'll wager that I bought Fairfax, Berkshire, and Markel each separately before anyone on this board.  This isn't a chest thumping arrogant statement---- just a guess.  But I've learned more than I'd ever imagined from message boards including this one.  One of the most important things I ever learned was the stock option accounting of the tech bunch like Cisco --- a company where sales and pre-tax profit would have eventually become the same number if Chambers would have had his way when he threatened Arthur Levitt.  Using that accounting Cisco could have literally taken over the entire world as all acquistions would add to earnings with the new accounting.

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This is the only message board i visit.

 

I have been to others but have not found them useful.

 

I agree with article found on http://1440-68131.blogspot.com/ by farnam street...I definetely look for others opinions that confirm my beliefs. Its like having valium when some one on the board may confirm your own thinking.

 

The great thing about this board is that there is very good intelligent debates about various ideas which makes you think from another point of view. Personally I try(it is not easy + I find it takes more energy) to pay extra attention to arguments/ideas that I have not thought of-I subsequently go on to to further investigation/reading as is encouraged here.

 

On a side note I check in on Farnham Street Blog daily + find various articles , topic etc very good

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This is the only forum I visit too. I like to get my opinions tested by other's opinions and this site is great for it. I try to read everything and ask questions only when I could benefit from it. There is a handfull of people on this site that I respect and that I expect them to destroy my ideas. I want people to challenge me, not persons that will acknowledge me.

 

BeerBaron

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I visit here, VIC, Guru Focus, Investor Village (for 1 stock, CEN), Yahoo Message Board for a few stocks.

 

Believe it or not I have found useful things on all boards but here has been the most profitable. I look for outlier posts. Either those that agree with me or are directly opposite. It works rather well, and I have gathered bits and pieces using this method.

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