There are numerous online forums that you can join or skulk through to get a feel for a company before you invest in it. They can be very valuable and very dangerous. My standard disclaimer applies. Just because it is written down doesn’t make it true. That goes double for anything on the internet. I have spoken briefly about some online forums and I will discuss a couple more.

First, why would you bother with online forums discussing a stock? A great question. Something that stuck with me from Phillip Fisher, one of the great investors, was to read everything you can on a company before you invest in and talk to people about the company. He used the term scuttlebutt to describe this skullduggery . We live in the internet age and it is the obvious first place to look.  One of the tenuous areas, the non quantifiable areas to look at, when evaluating a company, can be discovered in online forums.  Often what you can discover about a company is negative. Managements has taken a dump on their stock holders well, or as I discovered with one company I was researching, that one of the items listed as a short term security was actually a near worthless, non trading, long term security. Often, finding a reason not to invest is invaluable. Particularly if you are looking in cigar butt stocks.

Leave the Rose colored glasses at home. What do you need to watch out for? Spam, for one. Avoid Google finance forums because many of the stock forums with light activity have become havens for spam, particularly in the microcap and Net net stock space. But you also need to look for pumpers. These are usually transparent promoters of a stock, sometimes for money, or sometimes to try influence the price of a stock for their benefit. I doubt they have any influence on heavily traded stocks, but lightly traded stocks with little public information can be influenced by the right amount of information or disinformation. If you find a thread with useful information copy the information to another place. Yahoo forums in particular have a way of disappearing completely without a trace.

On the positive side, I have gleaned information about companies that I could not easily find in other ways. Or the postings turned me on to links that did not show up in the obvious online searches of a company (the best information is not always the easiest to find). It can highlight information that you may have missed when reviewing a 10k or highlight a distortion of the data when it is not obvious.

Start with Yahoo finance. Select the stock you are interested in say VaxGen. On the left side you will see a column that starts with with More on VXGN.OB. In the third section down News and Info, you will find message board the last item. Yahoo doesn’t discriminate against penny stocks, so go there if you are looking for info on  a penny stock.

Also check Fool.com, which I have posted about previously. Go to their CAPS section which is really an online stock picking game. The game itself works against people taking it too seriously, but again you can find interesting information and an overall grade on what the Fool Community thinks of the stock. They do not cover penny stocks at all.

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