Fit for the forum

The first time you log on to an online investment forum, don’t jump straight in and start asking questions. Until you understand the protocol regular users of the site have instilled into the user base, it’s best just to watch and learn.

In any forum where fictional names lend anonymity to users, there will be a collection of scammers and those with malicious intent who get a kick out of supplying false information to “newbies”.

There are also those who will genuinely try to answer queries or put forward investment ideas that can open some interesting debate, and by simply being a passive observer initially, this provides an opportunity to see who the dominant users of the forum are with whom you may eventually like to open some dialogue.

It’s also vital to have your news sources worked out and to keep abreast of the global macro conditions and big domestic issues. If there is a lot of debate in a forum on what effects Kim Jong-il’s death will have on markets and you type in “who is Kim Jong-il”, you can expect considerable scorn to be directed your way.

As Fairfax Media is the publisher of BRW, it would be remiss not to recommend our sister publication The Australian Financial Review’s website, particularly as it recently slashed the price for access. As newspapers come to grips with how to serve both print and online readers, unique content is pushed to news websites but the main drawcard for the AFR is brand trust. Information sources are useless if they are found to be unreliable.

Fairfax also offers Trading Room, which provides news, stock portfolio building, stockbroker searches and options for funds, super and retirement investment and planning.

Fairfax’s main competitor, News Ltd, has its own sites and now has most of its content behind pay walls, after many unsuccessful years of trying to make money from free content.

Aside from Fairfax, a plethora of sites will deliver varying degrees of financial news, including online trading platforms of all the big banks and stockbrokers and free sources such as Yahoo Finance and Ninemsm.

Once you are armed with a general knowledge of current financial events, a wide range of forums and investor sites can help you.

Aussie Stock Forums is not, as the name suggests, just about stocks. The general forum is for everything non-stock related and ranges from “What music are members listening to” to “Labor’s carbon tax lie”, “Women have the lowest level of financial literacy” and “North Korea’s new leader is pregnant”.

There is also a beginners’ lounge forum for newcomers to investing and areas for stocks, commodities, international markets, derivatives and general investment and economic forums.

Hot Copper is perhaps the best known stockmarket forum in Australia and has a 150,000-strong active membership that questions events as they occur throughout the day. There is a wide range of subjects, from social issues to geology, superannuation and sport.

Another equities forum is Top Stocks. Apart from stock forums, it provides data on company directors’ buying and selling, education tools and ASX research, and experts discussing ideas from the silver market to property management and balance sheets.

Like the other sites, forums range from general discussion of any topic to stocks and complex areas such as foreign exchange. The site has also started a Top Stocks wiki to aggregate information on all top traded ASX stocks. The concept is in beta mode and all members are invited to contribute.

EliteTrader offers forums and analysis tools and also provides a section devoted to software development and what’s available to the trader, including high-frequency trading.

These types of online forums can provide some good insights to companies and markets but they can and have also been used for ramping up stock values as there is no accountability for posts except a general code of conduct and ASIC guidelines for ensuring the privacy requirements of members.

A new site, Investable, which launched in November last year, provides a forum for investors to join networks to share ideas, with all performance tracked.

Investment bank traders Ben Freischmidt and Lachlan Heussler and an investment technology and algorithm buff Fil Mackay all quit high-powered jobs to start Investable. Their focus is on developing it into a respected site for high-end fund managers, brokers and other experts to exchange information in a safe environment. Importantly, you have to use your real name and members’ bona fides are checked.

The site is also open to retail investors but for now it doesn’t have the activity of an open stock forum. Although networks are being built, the founders are ultra-cautious about maintaining network privacy.

In time, users will be able to mark their information for distribution through just their network or into broader forums. Importantly, individuals will be able to achieve a rating on their investment performance.

Heussler says the business’s point of difference is its accountability. He believes it will become a benchmark for tracking the investment performance of individuals and firms, if it grows to plan.

Investable can also take data feeds from sites such as Hot Copper, derivative providers or anyone in the electronic trading sector, access their proprietary aggregated data and churn out research products that can go back to the providers’ members.

The research service will be rolled out in the next month and will provide early cash flow as the longer-term creation of networks within the site takes place.

Performance tracking services for wealthy individuals is already available but it’s a specialised service that takes in less than the top 0.2 per cent of investment managers.

Freischmidt says that in a professional and transparent industry such as investment advice, it’s a glaring hole that there is not a more widespread system for tracking performance.

A long-term goal is that investment advisers will eventually have their Investable rating on their business cards and correspondence.

Sites in the United States provide an insight into what will eventually come to Australia. Covestor tracks more than 180 “proven investors” with members able to follow traders of their choice and have their brokerage account mirror what those traders buy and sell. Sites such as Alpha Clone and StockPicker follow the portfolio moves of mutual and hedge funds and keep tabs on what the biggest market movers are up to.

Screening sites use computer programs to search thousands of stocks for specific parameters like market cap or dividend yield to pick the next big share mover.

Although growing in popularity in the US, it is common sense to be suspicious of anything using “black box” technology.

Understanding how a particular screen works should be a key consideration in its use.

With all share forums and trading platforms, due diligence is the greatest tool to prevent bad trades.

If forum postings are anonymous with names such as “roguetrader” and “wagthedog”, all information – no matter how well it’s presented – should be treated with caution and research undertaken to prove or disprove any trading tips or “inside” information.

The same goes for new technologies that claim to give you an edge.

BRW

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