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Yahoo! Censors Common Sense

We've often mocked what passes for analysis on the message boards over at some competing investing sites. Many of them seem like little more than wastelands in the ether for people to rant and throw "yo mama!" barbs around.

Compared with the Motley Fool Hidden Gems discussion boards, for example, where subscribers often feel that the critiques in posts are worth the subscription price alone, the "eureka" moment you feel when you do get a cogent analysis on a site like Yahoo! (Nasdaq: YHOO  ) can feel like finding a pearl in a mountain of shucked oysters.

Still, when you venture into these territories, you have to have thick skin and be prepared for sharp retorts and stinging rebukes. More than one commentator has thought of unmonitored message boards as akin to a Wild West shootout.

That's what makes Yahoo!'s decision to ban freelance stock analyst David Phillips from its message boards for purported terms-of-service violations so absurd. Phillips shares his knowledge in a blog called 10Q Detective, which delves into a company's footnotes to get to the bottom of an investment. Lately, he's been questioning the financials of a company called Raser Technologies (NYSE: RZ  ) , a geothermal power-development and technology-licensing operator.

Recently, Phillips used his blog to question Raser's description of its first geothermal power station as a success. As he pointed out on 10Q Detective, the station hasn't undergone flow testing, an integral part of a plant's viability, and it still needs third-party analysis before Merrill Lynch (NYSE: MER  ) will finance construction. In the past, Phillips' blog detailed how Raser was originally an electromagnetic-technology purveyor that hyped its achievements the way many penny-stock mills do.

It's not as if he was Whole Foods Market (Nasdaq: WFMI  ) Chairman John Mackey, posting under an assumed name and extolling the virtues of his business. He's not Henry Blodget, accused of boosting stocks to the public but disparaging them in private. He isn't Bear Stearns hedge-fund manager Ralph Cioffi, accused of encouraging investors to put more money into his faltering funds at the same time he was withdrawing his own capital. Many of the messages Phillips posted on Yahoo!'s Raser board either related the information he uncovered about the company, or linked to his blog posts about them.

Shares of Raser, which hit its 52-week high at about $18 a stub last December, have tumbled by half since then. Raser partisans are reportedly smarting as a result, and they've mounted a campaign to have him banned. It seems the company's efforts at censorship were at last successful; Phillips reports that Yahoo! has banned him from posting to their boards.

You've got to wonder what the site monitors were thinking. Yahoo! has fallen behind Google (Nasdaq: GOOG  ) in the search space. Its management screwed up a potentially lucrative merger with Microsoft (Nasdaq: MSFT  ) . And social investing sites such as Motley Fool CAPS, Stockpickr, and Marketocracy are steadily gaining new investor adherents who like to mix opinion with stock picks. Legitimate message boards appreciate a diversity of opinions about a company, because knowing the downside risks of an investment can be just as important -- if not more so -- than understanding the upside.

Silencing outspoken critics doesn't seem like the action of a company radically remaking its business. Then again, maybe it does. Much like a company management that decides to divert attention from poor operations by taking on naked short sellers, perhaps lashing out at stock analysts will become another leading indicator of a business's decline.

Microsoft is a Motley Fool Inside Value selection. Google is a Motley Fool Rule Breakers pick. Whole Foods Market is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.

Read/Post Comments (6) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 25, 2008, at 11:25 AM, NightBengal wrote:

    People hate being told the truth, especially if it means that they've made or are making a bad decision. I honestly have not read Phillip's work, but it is truly amazing how often people with decent research and the ability to back up their results are repressed, overshadowed, or otherwise silenced by people who just say what their buddies want to hear.

    I truly hope that someone at Yahoo! gives an honest, objective review of this situation.

  • Report this Comment On June 25, 2008, at 1:18 PM, mdtopper wrote:

    What he said........ but I'm not holding my breath.

  • Report this Comment On June 25, 2008, at 2:28 PM, rkornfeld wrote:

    The trouble with Motley Fool, Mr. Duprey and his predecessors, all of whom have slammed Raser is that they are aligned with short sellers and naysayers.

    Unfortunately, Motley has a history of bad mouthing RZ and, therefore, the weight to be given to any of its publications and opinions is deminimis, because its tack is totally negative. Meaning place its comments on ignore.

    The issue is whether or not RZ can execute on its game plan this Fall and Winter and turn from a development company to actual commercialization. It says it can and time will tell.

    In closing, the old short position and theme to slam RZ is no longer applicable. Motley Fool- the "true fool"- for allowing this type of article to be published is short sighted and has a hidden agenda. Bio Tech and software companies don't have earnings either as they make the transition from concept to commercialization, which is where RZ is at this point. The business model is similar.

    Time will tell.

  • Report this Comment On June 25, 2008, at 3:22 PM, newpauper wrote:

    I truly enjoyed your piece on “Yahoo! Censors Common Sense”. As a consumer of stock chat boards for over a decade, I can relate to that “eureka” moment you describe whenever I run across anything of merit on Yahoo’s message boards (which is very rare, I might add).

    A couple security pros related that they performed a traffic analysis on one of Yahoo’s message boards and in turn learned that 90% of the traffic was emanating from one individual using thousands of Yahoo accounts. This individual allegedly is a marketing partner of Yahoo’s and the suspicion being that this marketer was simply creating fictional “traffic” designed to make advertisers believe that there’s more “eyeballs” on ads to inflate traffic counts. Unlike the other content providers, Yahoo allows users an unlimited number of Yahoo accounts, and with proxies, VPN’s, dynamic IP addresses from some ISP’s, verifying traffic as legitimate gets much trickier than simply counting clicks from Yahoo accounts or IP addresses.

    From the Yahoo boards that I’ve visited, I’m beginning to question whether or not there are any real posters using the services. Much of what exists is spam links to commercial sites trying to sell stock products or the kind of mind-numbing wasteland you describe in your article. Yahoo's report abuse system is a joke. You get a standard form letter back in an email telling you to ignore the problem or put the offender on ignore, and if the abuser has sufficient complaints Yahoo might delete their account, but they’re quickly back with brand new Yahoo accounts. Most of the boards run by Yahoo’s competition only allow one account per person per message board which I believe helps maintain the civility and sense of community as opposed to Yahoo’s antagonistic environment which turns off legitimate users.

    I agree message boards shouldn’t be performing any censorship regarding message content for topical posts pertaining to differing viewpoints on the stock. I think of David Einhorn and LEH, where Einhorn was quite explicit in his reasons for shorting LEH, and LEH felt it had to have spokespersons out smearing him personally instead of addressing his concerns. As it was, Einhorn ended up being correct. Let all the information pertaining to any stock flow freely. Any investor should have access to as much information as possible, if they’re considering investing. That includes the good, the bad and the ugly.

  • Report this Comment On June 25, 2008, at 6:42 PM, Nkdshrtsrcrooks wrote:

    Raser is in a epic battle with short sellers and short crooks. If someone is spreading false short manure on a stock for manipulation purposes and they are caught and removed from the message boards (not even sure how that can really be done) then good for Yahoo. It would be great if Motley Fool would be man enough to do the same.

  • Report this Comment On June 27, 2008, at 3:44 PM, razormd wrote:

    ...those Yahoo idiots did the same thing to me...I posted as "razormd" usually flagrantly sarcastic but ALWAYS truthful and ALWAYS accurate assessments of mostly biotech stocks...and in EVERY case my assesment was correct as to to the worthlessness of companies like NUVO, ANX, LSBC, VNDA, NVD, SNUS, FMTI, ILE and a host of others...and I posted a few times on RZ's board as well since I'm quite confident that the company is basically being run as a scam to dupe naieve investors...of course, I was always attacked as being a ruthless short seller which was utter nonsense...but the really stupid thing is that all anyone has to do is simply go back and sign up with Yahoo under a different name! what does Yahoo think they have accomplished?

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