Would you trust a stranger in the pub?

"I've got a tip from someone on the inside 'ere. Good for Glue, Kempton Park, 3 o'clock... honest Guv it can't lose"

Would you trust a shady stranger in the pub? Would you stake your money on it?

Well, every day millions of investors do. They meet up on bulletin boards to discuss financial affairs. And scammers gather like piranhas to offer them duff financial advice. Things have got so bad on some boards that lawyers have been called in to silence the fraudsters.

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But there are ways to avoid the scammers. If you know how, you can even find some great information on these internet forums.

It's prime time for the legal eagles

In recent weeks, energy groups Nighthawk and Nostra Terra Oil have won court orders to release the full details of some of the shady characters operating on the web.

They say that these fraudsters are posting "untrue and malicious statements" to drive down their shares.

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Basically, the scam is to short a share. They make up rumours that the company's failing. Once the shares are down, they buy them back cheaply and pocket the difference.

But this sort of thing has been going on ever since share trading started in the City's coffee shops in the 17th Century. Only now, the medium has changed. And instead of a few punters exchanging information and rumours in the pub, it's blasted all over the world.

I just can't see the lawyers getting to grips with this problem. And anyway, who's policing the people trying to drive share prices up? No, it's up to users to weed out the crazies. Just like down the pub, it's up to you who you listen to.

Hit the mute button on a ranting twit

Apart from during the bubble years - when the vaguest rumour could make a stock fly - I've never taken 'pub tips' very seriously. But genuine banter about stocks with investors that know what they're talking about, now that's a different thing.

And frankly, there's a lot of great banter on the boards. And unlike the pub, here you can hit the mute button on the ranting twits, the ill-informed and the conmen.

The best way to avoid the crazies is to head for a decent board to start with. As the boards have developed, I've noticed that the serious posters, the ones worth listening to, tend to drift towards one or two 'discussion threads'.

So the best thing is to check out a range of boards, provided by websites like ADVFN, iii, or MoneyAM. You can usually get a feeling for the quality of posters pretty quick. If I hit a board that's rude and full of ranting ill-informed twits, I'll try anotherone.

The more boards you sign up to, the more likely you are to find the best threads for any given share. Seeing as they're free, you might as well sign up to a few and give yourself a range of discussions to choose from.

If you find a discussion thread you like, but there are still a few ranters, then there's another line of defence. By 'filtering' out certain posters, you can literally mute the person. Wouldn't it be great if you could do that down the pub!

Not every board has this feature, but there are other vetting systems. For example, members can vote on how decent a post is, so you can quickly view what posts are worth reading.

Why ignore somebody that really knows what they're talking about?

I've always viewed the internet as part of a movement towards a more open and transparent world. And in the spirit of cooperation, there are great discussion forums on everything from back pain to making a spacecraft.

For every shifty operator, there are plenty of genuine people that are worth listening to.

I know many professionals in the City that use bulletin boards, even though they don't care to admit it. There's a kind of snobbery about conversing with 'outsiders'. But when it comes down to it, they know it's a great place to trade ideas and knowledge with other investors.

Just make sure you sort the wheat from the chaff.

This article was first published in the free investment email The Right side. Sign up to TheRightSide here.

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