Wednesday, December 21, 2005

Playing the Stock Market

This is not something I do. I invest in stocks for my retirement, a totally different and quite conservative activity. Just recently, though, I've been following a stock market bulletin board (BB) and have become intrigued by the thoughts that run through the minds and spill out onto the bulletin board pages of investors who are playing the market.

The first thought I had was, of course, that for every gainer there is a loser. All these guys (and I would guess they are mostly masculine) seem to be convinced that they can only win, never lose. Their strategies are "water tight". Hmm.

The second is that they are generally buying into small companies that have all the appearances of being not much more than a shell for the insiders to make money. This might be a little unkind but what is interesting is that a typical BB conversation may well include comments about insider trading and how the outsider can second guess the insiders. Much credence is given to press releases and how the wording can be interpreted. Here I am often surprised by the poster's complete lack of knowledge of the industry that he is commenting on. This implies that many of these investors could be potential mullets, ending up on the wrong wide of the balance sheet at the expenses of the insiders they hope to emulate.

I would guess that the size of a stock's bulletin board thread is inversely proportional to the quality of the company. Which could mean that the best stocks to invest in are those that engender very little interest on the bulletin boards.

However, reading tea leaves might be more rewarding.