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Why I Post Here

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By Gordon66
July 31, 2001

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

As of late several KKD bulls have impugned the motives of bearish posters. I can understand why people would be suspicious of bears. We live in a "can do" society where positive attitudes are valued, and being bearish conflicts with these values. Also, in general, many more stakeholders (those holding the stock long, employees in the company, even the economy at large) tend to benefit when a stock goes up and stays up, while only the much smaller group of short holders benefits when a stock goes down. So it can seem that bears, by hoping a stock will go down, are taking pleasure in the misfortunes of others. And there do exist paid bashers (just as there do exist paid pumpers), so one might pause to consider whether this is a board where such people might hang out. (FYI, it isn't.)

I can't speak for other KKD bears, but here is an explanation of how and why I take up resident as a bearish poster on certain TMF message boards. The trigger is I start observe a stock that has been shooting up much further and faster than improvement in the company's business prospect seem to warrant. I'll do some due diligence and watch that stock for a while, and may lurk on the TMF board to see what people are saying and thinking about it. Then, in some cases the valuation will cross a threshold in my mind where it has become clearly irrational. At that point I will usually take out a short position on the stock. I don't have the patience and discipline of cal8 and RAKEN, who wait for the technicals to turn bad before shorting a stock.

At that point I will stop lurking and start posting. My first post could be to challenge resident bulls to justify the present valuation of a company, such my first posts to the Amazon and Linux boards.

Or I may present a more systematic argument for being a bear, such as with this first post to the PALM board.

Or some random comment will trigger my first post, such as this one the ETYS board.

In the case of KKD, what triggered my first post was to correct an important misstatement of fact by cookedstock.

So these are some reasons I start posting. Why do I continue posting?

My primary reason is a selfish one. I have reached a certain conclusion about the valuation of a company, and I want to see how solid that conclusion is. I wonder whether I have missed some important facts or arguments that would justify the stock's valuation. So I present my facts and arguments for why I think the stock is overvalued, and invite bulls to present their arguments for why it isn't. The longer I go without finding what I believe to be a compelling long term bullish case for the stock, the more confident I become that my position is sound. The more my arguments are met by non-sequiturs and personal attacks instead of rational arguments, the more confident I become also.

So far, the best bullish case I've seen has been authored by ejandresen, who brought up some examples of "ten-baggers" of the past.

This provoked me to do a detailed analysis of these past comparables, and I reached the conclusion they supported my position better than they supported his. But this was a very useful exchange in my mind. I might have drawn a different conclusion. And if I had, I would have thanked him, closed my positions, and moved on.

So that's the primary reason I post. Another selfish reason I post is because I hope to encounter interesting investment related facts and insights of any kind. A good example is ejandresen's Extreme Dollar Cost Averaging method.

I decided to take this method out for a test drive on Nokia recently, a stock that seems perfectly suited to the method. It has worked nicely so far, but only time will tell.

Also useful have been sinkbiz's and RAKEN's technical analyses. This is an area where I know little, and now I think I am getting a reasonable feel for TA. While I think TA is far less useful than fundamental analysis, and no amount of TA can save you from an unexpected event, there is no law against using both fundamental analysis and TA.

After I've been posting to a board for a while, though, more complex motivations take hold. I become irritated that certain kinds of misstatements of fact ("great companies always get ridiculous-seeming P/Es") or flawed logic keep turning up, and I feel compelled to keep correcting them. Certain residents of the board have claimed that I keep repeating the same arguments over and over, when mostly what I'm doing is correcting the same errors over and over. I can understand that people don't like having their errors corrected, but this is a public message board, and if you don't like the heat, then get out of the kitchen. Or maybe do a little bit of actual research or calculations before making a claim about this or that. (By the way, if you want to see how classy posters react to being corrected, look here, or here.)

And I begin to feel bad for a certain kind of investor. If you've seen the movie "Poseidon Adventure," you may recall a scene where the protagonists are trying to find a way out of the overturned luxury liner. As they go along they keep encountering people that are going downhill instead of uphill. These people are headed for their doom, because downhill means going further underwater. The protagonists beg the people going downhill to turn around, but to no avail.

This is how I start to feel on a message board I've been following when the price starts to fall. I take no delight in seeing people lose money. And a stock is going to do what it is going to do no matter what anyone on a message board inhabited by few dozen people say about it. When a stock I've shorted starts to fall I am, of course, pleased that my positions are going up, and I get a sense of gratification for making what is looking like a good call. But I also feel bad for certain investors who are losing money. Not the momentum players and daytraders and institutions. It's the novice investors that concern me. Novice investors often invest money without understanding the risks involved. And when an investment turns against them, they often compound their errors by not selling or even worse, "doubling down," maybe even on margin.

I am aware that certain people on this board, such as HH or 4commonsense, will find it laughable that I might have such motives. They are entitled to their opinions. I am also aware that some posters, such as sinkbiz81, believe that KKD longs are predominantly experienced investors and don't need anyone to advise them. He too is entitled to his opinion.

However, I know for a fact, based on the emails I have received from some KKD longs thanking me for posting and by looking at the number recommendations that certain seriously flawed bullish posts have acquired that a significant number of inexperienced investors do reside on this board. If even only a few of these people are saved money by developing an awareness of the kind of risks they face in holding a highly overvalued stock, then that is something that would make me very happy.