Tuesday, October 19, 2010

The Value of Investment Forums

When the topic of investment forums comes up, I guess most investors will immediately shake their heads and recoil in horror, because most of what’s being spoken and commented on in public forums is basically noise. While I cannot deny this, one must understand that the value of good information is usually dependent on the person giving it, and whether he has any hidden agenda(s). It also follows, therefore, that truly good and valuable advice must come at a price – meaning you have to pay money for information which you are likely to act upon. Most people in their right mind would not act upon information being copied/pasted or mentioned in a public forum, as most of these statements/quotes may be unsubstantiated and are little better than rumours and hearsay.

So can any real value be extracted out of investment forums, or can we just unilaterally classify them as just another source of “noise”, akin to your neighbor or the taxi driver giving out stock tips? As with all things, one must analyze the quality of the forum, its content as well as the intentions and experience of its members. My intention in this post is to review several of the more popular investment forums and make general comments on the quality of the forums with regards to gathering useful information to make informed decisions. As readers, you may or may not agree with these classifications, but I welcome you to please articulate your views in the comments box so that everyone can have a healthy, lively and constructive sharing session.

One of the more popular investment forums is a paid forum hosted by Shareinvestor, and Shareinvestor also consists of other useful features for both investors and traders with its fundamentals fact sheet and charting software respectively. I was a subscriber to Shareinvestor from 2007 through 2009, and the forum did have some very wise folk giving very pertinent insights into business activities and prospects. Best of all was “Oldman” or Dr. Michael Leong who is the founder of Shareinvestor, and he would occasionally pop up to share insights into his investment criteria and the companies he owns. He has several large positions in a few locally-listed companies (I will not elaborate on which ones), and tracks their business closely. I personally had benefitted a great deal from insightful comments posted on Shareinvestor’s forum back then, and also absorbed a lot of timeless investment principles from the experienced veterans. However, as markets have recovered somewhat since late 2009, the forum has also been filled with more incessant chatter involving speculation, tips and hearsay. However, if one digs deep, there are still some veterans who are very savvy investors and who will share their knowledge without hesitation, and without any hidden agendas. My rating for this forum is about 6 out of 10.

The next most “popular” forum has to be Channel Newsasia’s market talk forum (“CNA”). CNA is a place where everyone and anyone can post a new thread, and moderation is close to non-existent except for the filtering out of swear words and the like. This forum is literally littered with rumours, tips and half-truths; and almost anyone can say anything they like without much support or evidence; which means it is a forum lacking in substance and depth. I dare say that there is only the occasional forum post which has substance and depth, but it is probably less than 0.01% of all the posts there, most of which constitute incessant noise. The rating for this forum is a low 2 out of 10.

The next forum is that of Invest Ideas, and I must say this forum is of much higher quality in terms of the breadth of articles posted, as well as opinions given by the forum members. There are threads which range from technical analysis to fundamental analysis, as well as economic news and alternative investments such as gold, silver and land banking; all the way to properties. In addition, there are also threads which discuss other non-finance/investment related topics such as parenthood, movies and other interests. Moderation is tight and the moderator is very active in ensuring the forum abides by rules and regulations; and this ensures proper “behavior” by the members and facilitates responsible posting. My opinion is that one can get a ton of information (segregated by topics) on this forum, on almost any discernible financial topic; as well as discussions on listed companies listed on SGX, NYSE and even HKSE. One main gripe I have is that most of the articles are copied/pasted, and the members’ contribution to individual threads is too little in general; another complaint from me is that there are simply too many threads and it can get quite voluminous and daunting for one to keep up with the influx of information, which results in information overload. But overall, I would still give 8 points out of 10 for content and presentation of ideas.

The final forum which I would like to highlight is that of Value Buddies. Though it would appear to be a relatively new forum, it is actually a continuation of the former Wallstraits forum set up by Curtis Montgomery, a famed value investor. Wallstraits started out in 2003 and continued till about 2009, where it was shut down due to neglect and then later “re-founded” as Afralug. Afralug itself went out of commission recently, and the current Admin started Value Buddies in the spirit of continuing the discussions on value investing. For value investment aficionados, this forum will offer a platform for serious discussion on companies and their businesses. Other topics covered also include personal finance, property and alternative investments, which have separate sub-forums. Posting on this forum is strictly limited to members only (which is FOC) but anyone can visit to view all threads. Content and presentation wise, I would also rate is as an 8 out of 10.

So after all has been said and done, can one extract value out of these aforementioned forums? It really depends on your focus, time horizon and how much trust and importance you place on specific forumers postings. Ultimately, my advice would be to take everything with a dose of salt and go research it yourself. There’s nothing like good old independent thinking to come up with some really brilliant ideas. Of course, forums may be the “seeding grounds” for such ideas, but one has to work hard to delve into it on his own. After all, good and useful information NEVER comes free!

Disclaimer: All opinions expressed in this post about forum content and quality are of a purely personal nature, and not intended to either encourage or discourage the general public and readers from visiting these forums. Readers are advised to make their own independent assessment and decisions on these forums and not to rely on this blog post for advice or construe my statements as recommendations to visit or avoid said forums.


Zelphon said...

But Channel News Asia forum is a FUN place to chat...

Many postings are a joy to read..

Can really make u laugh..


JW said...

There's also RMAO forum

Musicwhiz said...

Hi Zelphon,

Well I never said CNA was not fun, but for getting serious information it's not exactly a good place.


Musicwhiz said...

Hi JW,

Ok, sorry I left it out. I was just commenting on those forums which I am more familiar with. In fact there's also SGFunds forum, NextInsight forum as well as Sharejunction, but I did not include them in.