An interesting article published by Next Investors who sum up the types of people on Internet Char Rooms and Social Media. TON seems to have a full house from observations.
The rise of social media groups and internet stock chat rooms have added a whole newdimension to investing in small cap stocks. Internet hype is great if you know how to reactto it, just DO NOT get caught up in it.Stick to your own research and use internet chatter only to gauge sentiment of other holdersand find leads to research. Ignore what people on the internet tell you to do.Chat rooms are also useful to gauge the general sentiment around a stock and whether thereis too much hype around a stock. If there is way too many posts on a particular stock, thechances are you missed the boat to get in at the right time.There are eleven main types of internet posters to look out for, and we will discuss them indetail. Once you know what to look out for, you will be easily able to identify exactly whatyou are dealing with.Sometimes chat groups can erupt in overly positive hype. This gives the inexperiencedinvestor the impression that the stock price is going to increase significantly at any moment,and they will miss out by not buying immediately.With many posters predicting massive price rises at any moment, some very articulate andconvincing posts start coming out. The feeling of missing out is very difficult to resist, andmany will invest based on chat room hype alone. NEVER invest on information from a chatroom or social media.The best strategy if you find one of your investments caught up in a period of hype is to goagainst the herd and sell some of your stock at a profit during the hysteria. The price willgenerally creep back down after they move onto the next hot stock — this can provide a greatopportunity to buy back in.It can be hard to sell when all of Twitter or a chat room is in hysterics about a huge imminentprice rise. Learn to recognise it for what it isYou will find all sorts of characters on social media groups and stock chat forums when hypeis in full swing. There are a few key types to look out for. Learn to identify them and you willbe able to see the true agendas of posts with clarity, and be able to avoid getting caught inthe hype, and hopefully play it for profit.The LurkerA Lurker will not contribute any information to an internet stock forum, but rather observethe activities of all other poster types. This is our recommended behavior to engage in whenattempting to gain information from social media and internet chat rooms. Lurkers are by farthe most common type of chat room participant.The Mysterious InsiderThis poster will give an air of inside knowledge and can influence a lot of readers. Conveyingtheir message is usually done using implication. Or they provide information thatencourages the reader to infer a message that could be construed as inside information ifspelt out directly. Expect unrealistic price predictions from this poster. DO NOT listen to thisposter.Desperado\Clearly in Over Their HeadThis poster has clearly invested too much money with no research. They will desperately begfor information from the perceived insiders, often resorting to tactics like setting a deadlinewhen they have to sell (wedding, credit card bill, etc.) to try and gain information. Theinformation they get from the “Mysterious Insider” will be a complete guess.If this poster type has somehow found out about and invested in your stock, it is a prettygood indication that the level of hype is high around your stock. It may be time to considertaking back some of your initial capital if the price has risen significantly.The Dumb Attack DogThis poster will aggressively defend their stock to the death by attacking and aggressivelyridiculing any perceived negativity. They will NOT constructively argue the point. Avoidengaging this poster at all costs.The Smart Attack DogThis poster will defend their stock to the death by aggressively defending any perceivednegativity. They will however constructively argue their point, but with an overly optimisticbase and unrealistic expectations. It is also advised not to engage this poster type.Dangerous InfluencerThe Dangerous Influencer is a pro-active version of the Smart Attack Dog. The dangerousinfluencer generally has above average intelligence and will have been successful in a fieldother than investing in resource stocks (their day job for instance).The Dangerous Influencer is usually very articulate and convincing and will post seeminglywell researched content as to why the stock is a good investment. The problem is that they are “in love” with the stock, and the written research created by them is generally an attemptto convince themselves as to why they have invested, and then shared in the chat room.Their well-researched posts will be extremely optimistic and come with extreme valuationsbased on flawed, over optimistic logic, but presented very articulately. Because of their aboveaverage intellect, the Dangerous Influencer is very confident and truly believes theirinvestment decision is correct and will work very hard to convince themselves and others.Their behavior is not malicious or devious in any way, they truly believe in their mind whatthey are writing, and it is unfortunate that many others get convinced too.After a period of declining stock price, the Dangerous Influencer will generally realise thattheir investment is not working and turn into a “basher”. The time it takes to fall out of lovewith the stock varies from a few months to years, and the degree of subsequent bashing willvary.Head of the cheer squadThis poster will somehow take any negative information and paint it as a positive for thecompany. Some posters will proudly state they are in love with the stock, that they areinvested 100% in the stock. They are not capable of seeing any downside to a stock – this isvery dangerous.Use this poster as an example of exactly how NOT to invest.Influencer BasherThe Influencer Basher will post overly negative analysis on a stock, thinking that their actionswill somehow cause a drop in the stock price. This may be because they are trying to purchasestock and want to buy in cheaper, or that they have sold out and want to validate theirdecision by seeing the share price drop.It is extremely unlikely that overly negative or positive posts online will have any effect on astock price, unless the stock is highly illiquid.Troll BasherThe Troll Basher posts overly negative information in order to get a reaction from otherposters. This is usually done purely for amusement purposes. The most prone to react to theTroll Basher’s posts are the “Dumb Attack Dog” or the “Leader of the Cheer Squad”.We suggest you sit back and enjoy the fireworks.Paid BasherIn some rare instances, a person will be paid to go onto a stock forum to post negatively abouta stock. This is unlikely in most cases, but the accusation gets thrown around by “DumbAttack Dogs” and “Leaders of the Cheer Squad” at the “Influencer Bashers” and “TrollBashers”.Conspiracy Theory NutThe Conspiracy Theory Nut is so convinced that the stock price should go up, that they tryto explain why the stock price is NOT going up using a number of different conspiracytheories. Usually, the stagnant share price is blamed on “stock price manipulation” bybrokers or institutions.Manipulation has been known to happen, but there is very little chance that a share is notrising due to being held down deliberately, especially not for months on end. Claims of shareprice manipulation usually start after a few months of poor share price performance and ishappily accepted as the truth as it conveniently explains to them why THEIR predictions ofmassive stock price rises have not come true; rather than the admission that they got it wrong.If you go on any chat room where there is a significant amount of posting activity and thestock price hasn’t moved for a few months, nine times out of ten the cheer squad will beshouting about manipulation to justify the poor performance.See if you can categorise the posters you see everyday.
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