The Internet has given investors many excellent sources for doing due diligence on the thousands of stocks available for purchase. But for many investors, finding trustworthy sources of information about a particular company can be challenging.
One source that many investors look to for reliable information on a company is the various stock discussion boards and forums. While some of these research sources can be helpful, many of these discussion boards and forums have dangerous elements to them.
Almost all stock forums contain slithery characters that have insidious hidden motives when posting their comments. Some of these forum posters are so clever at what they do, even the most sophisticated investor can make a bad buy or sell decision based on the poster’s deceiving posts on the forums. Recall that even the CEO of Whole Foods was caught posting in an insidious fashion on a company's stock forum.
One slimy character in particular to be vigilant of is the omnipresent stock ramper. S/he can be found on almost every discussion board / forum and too many times investors can make bad buy decisions by following the ramper’s misguided advice.
Remember, the anonymity of the Internet should make you skeptical of what anyone says if you don’t know who they are. Before making a buy or sell decision on a stock, make sure you are dealing with a reliable source. And if that source is an anonymous stock forum poster, that source is rarely reliable.
Here are 15 ways you can identify the stock discussion board ramper. I’ve seen the same behaviors in the stock rampers across many stock forums. Once you know the warning signs, you can learn to spot the ramper much more easily:
1. The rampers post exorbitant stock price predictions.
2. The rampers warn others they better get in now or else. Their "buy now" posts almost sound like threats.
3. They attack those who disagree with their lofty predictions. They cannot back up their arguments with a rational discussion, so they resort to petty name calling and telling others who disagree with them that they are "full of it."
4. They are not open minded. You cannot have an intelligent discussion with these types. They will do whatever they can to discredit those who disagree with them by spreading false information. They are very often antagonistic.
5. They post their predictions over and over and over desperately hoping to move the market. They never do, because what they say is insignificant to the market. That is because no one knows who they are (see below).
6. The rampers rarely (if ever) backs up their predictions with concrete, specific numbers - if they do, projected sales numbers are way beyond what the company, analysts, and industry insiders say is realistic. But somehow, according to them, even people in the company are overly PESSIMISTIC when it comes to their own sales projections.
7. They post anonymously - they are no-names in the financial world or the particular industry that the company is involved in. Credible people who make lofty stock price predictions will often post their real names – or link to articles they have published - so others can get a feel for their pedigree and can research their background. The vast majority of credible stock market heavyweights do not post in discussion forums. If they do, they usually tell people who they are and can prove it.
8. Oftentimes the rampers are hired by boiler room operations. Their pay grade is whatever you could imagine a company would pay someone to post on Internet forums – not much above minimum wage.
9. Rampers often talk of a fictitious track record in predictions - legends in their own mind. They rattle off all their past “accurate” predictions including that the sun was going to rise in the east today.
10. It is obvious that the rampers have an agenda on the discussion board. They are not objective about the financial environment, the company, management, etc. Their posts carry the same one-sided theme. Bad news is good news in reverse. Any good news (even modest good news) is an affirmation of how the stock is going to appreciate to incredible levels shortly.
11. They appear to be rabid on their support of the company – beyond a reasonable amount of enthusiasm, the ramper comes across as almost crazed in his/her excitement.
12. Rampers are egotistical, and it comes across in their posts. Anyone who does not agree with them is an “idiot,” even those who are esteemed in their respective field. They are not respectful of those who disagree with their predictions.
13. When the stock is on a run, the ramping intensifies – the stock is “going to the moon.” This, incidentally, is often a great time to sell the stock. Remember, no one every went broke taking profits.
14. When the stock is in a lull, the ramping may intensify in a desperate attempt to do a quick pump and dump scheme.
15. The ramper will unceremoniously dump the stock when their mission has been accomplished. Those remaining in the stock are now deemed to be “bagholders” by the pumper.
The rampers continue their agenda over and over. It happens on every stock discussion board – especially on penny stock boards, when pump and dump operators and boiler room operators feel they can have an impact on a thinly traded stock.
Fortunately, with practice, we can learn to spot the ramper once we know the red flags. With experience, you get an intuitive feel about various posters on the Internet – even with the anonymous nature of these stock forums.
Learn to spot the slithery ramper, and you'll be a better investor.