Bulletin Boards

Celticheart Investor

A beginner's guide to trading and investing

Although I have mentioned Bulletin Boards (BB's), also known as Discussion Boards in the past, I feel it is worth looking at some of the positives and negatives of posting messages on these boards.

In theory they are meant to be an outlet for investors and traders alike to exchange information and discuss the various merits and pitfalls of companies that are either invested in or are considering investing in.

There are many excellent and well researched posters out there from whom you can learn a great deal, not just about investment but about the technicalities of the companies involved. I am interested in oil and gas production and have learned a lot about the specific terminology used in exploration and recovery of both. When investing in any company it helps to have a decent understanding of how they function.

The problem is that as well as genuine and knowledgable posters there are others that have other less savory motives for posting. These can range from cynical exploitation to the modern day phenomenon of Trolling.

So what exactly is a Troll, well to quote an extract from Wikipedia:

"In Internet slang, a troll is a person who sows discord on the Internet by starting arguments or upsetting people, by posting inflammatory, extraneous, or off-topic messages in an online community (such as a forum, chat room, or blog), either accidentally or with the deliberate intent of provoking readers into an emotional response or of otherwise disrupting normal on-topic discussion."

The problem is, those that facilitate the boards don't always read or moderate what is written but what they will do is respond to a direct complaint through their neighbourhood watch facility. Some boards are better than others and as a result are less prone to abuse. My advice is simple, don't get involved with these people, they want a reaction, that is their sole purpose for being there, to disrupt constructive discussion.

Sometimes it is hard to understand why people would spend so much of their time posting on boards where they have openly declared no financial interest simply to tear down the company's shareprice in any way they can.

I have heard it said that these boards do not influence the shareprice but I disagree, the sheer volume of posting some of these people indulge in pushes the discussion up the search engine rankings so new investors researching a company often come across negative and false information.

Beware also that responding to these trolls can draw the attention of the facilitator/moderator to your own posting, often resulting in suspension of your right to post. I sometimes feel that this is the true reason behind the trouble causing posters, the removal of any positive sentiment that might counter what they are trying to achieve.

If you feel that a fellow poster has been wrongly suspended for a period or even banned for responding to these people, let the moderator know either through neighbourhood watch or via e-mail. If enough supportive posters do that then those wrongly targeted will be re-instated.

Continue to post on these boards as sharing valuable research and information is helpful, particularly to those relatively new to the world of investing just be careful who you trust and take nothing at face value

A cautionary note, trading and investing in shares carries a level of risk, these blogs are only meant as a basic guideline to investing and trading, always do your own research and base your decisions on what you can afford to lose. This blog is not intended to provide financial advice as I am not qualified to do so, it is simply designed to provide information about how the markets work that might be of some help to private investors like myself.

Communication

Celticheart Investor

A beginner's guide to trading and investing

One thing we all rely on in making our investment choices is receiving information both from the companies we are interested in and about those companies. You would imagine that keeping private and institutional shareholders well informed would be a pre-requisit of any sound business but in truth, the quality of that information varies from company to company. Some do it extremely well and others fail miserably.

So what are the sources of this communication and where can we look for it?

That largely depends on the kind of information you are looking for, any company who understands the value of effective communication will have either its own shareholder information department or, will employ the services of a financial PR company. This is fine if you are looking for an overview of the company's management structure, its operations and its philosophies.

If however you are looking for price sensitive information, the kind of data that will have a real impact on the shareprice, good and bad, then you will have to look to the Stock Exchange's official news service, the RNS or Regulatory News Service. By law, any information that could have a direct impact on the company's value has to be released through this service. The theory being that by informing all of the market at the same time it gives everyone the same chance to make their value judgements.

Occasionally of course sensitive news is leaked in advance, it should not but the reality is it happens. This might be someone genuinely in the know or simply an observant member of staff lower down the ranks. Either way it can be classed as insider dealing and can often be the source of ill founded and damaging rumour. My advice would be, if it is not in an RNS take it with a pinch of salt.

So how do you find these RNS messages? Well the easiest way is to go directly to source and sign up for the LSE website, from there you can simply log in, click on the NEWS tag and enter the epic code of the company concerned

http://www.londonstockexchange.com/products-and-services/rns/rns.htm

There are of course many other ways of acquiring information such as the many bulletin and discussion boards that are a daily part of communication for many investors. The problem with these boards is they vary immensely in both the quality and reliability of the information on offer. Some of these boards have knowledgable, experienced posters from whom you can learn a great deal but sadly and far too frequently for my liking there are many posters that have little to offer except cluttering up these boards with nonsense.

Some of these posters have their own agenda of course either talking down a company (de-ramping) or talking up a company (ramping) to try and influence weaker shareholders into either buying or selling their holding. You might think that this would have little effect on the shareprice but when you consider the hundreds of thousands of people who read these boards every day (far more that  post on them), you can see the influence that it can have.

Social media has become a powerful tool with applications such as "Twitter" and "Facebook" being very effective at reaching large numbers of people in a short space of time. Recently I notice that even CEOs of companies are not exempt from posting "Tweets" about seemingly innocuous events in an attempt to score points over their competitors. Whether this is a professional way to behave is questionable in my opinion but for some it is a way of life.

There are of course other means of acquiring information such as the press, many newspapers run financial columns with both free and subscribed share tips available. Whether or not you trust their judgement there is little doubt that they have a following and can often influence shareprice simply by weight of numbers. Before you invest your hard earned money on the back of these tips I would strongly recommend that you do your own research too as, all too frequently, prices spike on the back of these tips and you can easily get caught out by buying in at too high a price only to see the price retrace rapidly a short time later.

There are of course the paid investment advisors who run subscription only services with varying degrees of success, this could be provided by your stockbroker or by an independent advisor. Whichever catches your attention you would do well to look at their past record before paying them for their services.
Some of these, even high profile ones do not always get it right, sometimes spectacularly so.

There has recently been a growth in the number of professionally run seminars and forums where companies get to present their case to private shareholders. This for me is an invaluable source of information as the presentations are often made by senior management, even by the CEO and COO of the company. Podcasts have been used effectively too with online interviews with CEOs presenting their case.

For links to these events simply look on line for investor forums such as http://www.proactiveinvestors.co.uk/ or http://oilbarrel.com/pub/conference

Next time:  Locking in profits

A cautionary note, trading and investing in shares carries a level of risk, these blogs are only meant as a basic guideline to investing and trading, always do your own research and base your decisions on what you can afford to lose. This blog is not intended to provide financial advice as I am not qualified to do so, it is simply designed to provide information about how the markets work that might be of some help to private investors like myself.

 

Invest in people

Celticheart Investor

A beginner's guide to trading and investing

I was going to get back to looking at what other tools we have available to us in this blog but something happened to one of my investments, that made me realise the most important thing of all. 

When we invest in any company the single most important factor to consider is the quality of the people running it. In short invest in the people at the top not just in the businesses they run.

The incident I am referring to was a simple RNS or Regulatory News Service
announcement, the London Stock Exchanges service that ensures that price sensitive information from listed companies, and certain other bodies, is sent to all RNS subscribers at the same time.

This one, from "Magnolia Petroleum" was not earth shattering, it was not to say that suddenly we had found masses of oil or gas, it was simply to counter speculation that had been taking place on the various Bulletin Boards of late.

What this did tell me was plain and simple, this company's board of directors listen to the concerns of their shareholders and respond accordingly. 

It is not just this incidence that makes me say, invest in people, look at their track record, are they proven, have they shown previously that they are capable of delivering on their promises. If the company that you invest in have quality people they are more likely to bring value to the company you invest in.

That also extends beyond the BOD to the technical managers further down the line, in the case of an oil company it could be a geologist or  an oil land man who have been in the industry for many years.

I can think of one particular case where the CEO took a small oil and gas company and turned it into a major player, selling it to a national organistation  for over £1.5 billion. The thing is he is now starting again with another venture, wouldn't that inspire you to trust his judgement again. 

Although I have mentioned one particular field, the same values apply regardless of market sector, it is simply a question of doing your research as much into the people involved as the business proposition they offer.

The other value top quality management bring of course is their ability to raise funding, simply because they are trusted by institutional investors to deliver.

I read an argument recently on a Bulletin Board that stated the CEO was not qualified to run the company because he had no hands on experience of the work involved but was a corporate lawyer. The thing is he didn't need to be, that is why he employs specialists that are his skill is in running the business and understanding how the city works.

Richard Branson is not a musician and neither is he a pilot but that has not stopped him from creating fantastic businesses in both the music industry and in the aviation business.

So the message is this, good people build confidence and trust in a company, follow the people that make things happen and you will not go far wrong.


(Note: We will discuss the, complex workings of a bulletin Board at a later date)

Next time:  Stochastic

A cautionary note, trading and investing in shares carries a level of risk, these blogs are only meant as a basic guideline to investing and trading, always do your own research and base your decisions on what you can afford to lose. This blog is not intended to provide financial advice as I am not qualified to do so, it is simply designed to provide information about how the markets work that might be of some help to private investors like myself.