The internet has done great things for the private investor, but you need to tread carefully.
Information about companies and industries used to be expensive, hard to track down, or both, and this gave institutional investors a huge advantage over the rest of us. But the internet has levelled the playing field and these days, by and large, what the ‘instos’ have, we all have. It’s just a question of using it wisely. So in this week’s Investor’s College, we’re going to offer some tips for researching stocks online.
First of all, you should know, if you don’t already, that a lot of the information on the internet is plain wrong. You should only rely on information from reputable sources and even then it’s best to find something to confirm it. If you’re placing heavy reliance on something, then it’s best to check it outside the internet. Quite often you’ll find that one website has put something forward as gospel and other sites have then found it and copied it. So what looks like a large body of evidence might in fact stem from one guy spouting nonsense in a dark room in San Diego.
Gumption
A little gumption here can go a long way. Some sites have more to lose than others from getting things wrong, and these are likely to be more reliable. You can reckon, for example, that The Sydney Morning Herald or Reuters will spend more time checking their facts than www.trade2win.com.
You also need to be wary of free financial advisory sites and bulletin boards. I should know, because I used to work for one (The Motley Fool UK). There are good-natured and skilled investors out there offering their opinions free of charge, but not many and they’re pretty hard to tell apart from less scrupulous operators. If someone tells you a stock is about to go through the roof, it’s very likely because they own some and are hoping to push the price up.
To read more of this article about
investment information from the internet, visit The Intelligent Investor at
www.intelligentinvestor.com.au.
