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Be cyber savvy

Ian Campbell visited more than 500 websites while doing research for his own site, which is devoted to mining, oil and gas investments.



Be cyber savvy

It's easy to be overwhelmed by the plethora of advice and bloggers on the Web. So take your time, check credentials - and watch out for scammers

Gavin Adamson

Investors looking for tips among the sea of blogs and chat rooms on the Internet should beware that, at best, they offer a good place to start your research - but at worst, they're places to avoid.

So take your time, watch for product pushers, check the blogger's credentials, and know your investment goals. That's the general message from securities regulators, and from many bloggers themselves.

Ian Campbell, a 66-year-old financial blogger and semi-retired Bay Street veteran, visited more than 500 websites while doing research for his own site, which is devoted to mining, oil and gas investments. "I concluded that most of them were absolutely nonsense. There were about 10 that were any good," says Mr. Campbell, a founding member of the Canadian Institute of Chartered Business Valuators and owner of the Stock Research Portal (

Do your homework

The first lesson Mr. Campbell imparts comes from his description of the countless hours he has spent online, leading himself down thousands of hyperlinks to dead ends before he found the dozen or so blogs and chat rooms that he now visits regularly.

The challenge for self-directed investors is that there's no way to avoid doing a lot of homework to find sites that you trust and like. "Most of the sites weren't worth more than two clicks," Mr. Campbell says - one to enter the site, and another to exit.

When he finds bloggers he likes, their URLs become part of his "blog roll," a typical blogger's practice that tends to reinforce the popularity of chat rooms and sites that have trusted followers.

"Mish writes interesting stuff," Mr. Campbell says, referring to Mike Shedlock, a U.S. investment adviser whose site ( has a loyal following.

Mark Dickey, senior communications adviser at the Alberta Securities Commission, says a fundamental caution for self-directed investors is to take the time to find reputable sources, whether for general information or for specific investment products.

He notes that fraudsters often push their wares by insisting that investors make deals quickly: "There's pressure to invest immediately."

Avoid the product push

Some sites, Mr. Campbell says, shill products or investments - and it's best to steer away immediately.

He acknowledges that his own blogging (at drives traffic to his investment site, but says that it's not an overt plug and that he doesn't promote any investments at all: "I really work on being independent."

His blog focuses purely on economics and resource research that he has read elsewhere. He makes references to other sites, and adds to the discussion. "I use other people's articles to say, 'Here's an interesting view that's very different from mine and you ought to read it,'." says Mr. Campbell, who is based in Toronto.

Some sites allow discussion of specific investments, but with limits. For example,, which was developed by David Jackson, a former U.S. technology analyst and hedge fund manager, allows members to trade ideas but prohibits discussion about stocks trading below $1 (U.S.) "They are most subject to manipulation," the site warns.

Regulators note that appearance of insider tips and secrecy is another typical characteristic of potential fraud.

Writer credentials

Peer vetting is important in the online world, especially when it comes to blogs. Good financial blogs endure when users trust the authors. In turn, that generates more traffic and interest from search engines.

Jay Currie, a Vancouver-based independent website developer (who used to be a judge for the now-defunct Canadian Best Blog Awards), says it's true that some of the best online postings are written by bright people with quick wits, but the importance of blogger credentials and identity grows the closer you come to making a decision about an investment.

He cites, a Vancouver-based investing website that encourages members to share research about Canadian stocks and industries, particularly small and micro-cap companies.

Members of the site can post messages and blogs, and they can also join discussion groups called "bull boards," which are online chat rooms.

"The bull boards can be good; I've actually found out facts about companies that I've worked for that I hadn't known before on the bull boards, but I was in a position to verify them, whereas most people are not," says Mr. Currie, a long-time blogger himself.

Watching for fraud

While it's easy to ignore bad bloggers, every provincial securities regulator in the country is interested to know about anyone who might be preying on Canadian investors, whether it's online or at the local community centre, says the Alberta Securities Commission's Mr. Dickey.

"If there's a possibility that any securities laws are being breached, we're interested to know about it," he says, adding that investors should contact the securities regulator in their own province or territory if they have concerns. "We can look up records, do background checks, and check to see if they've been sanctioned by us."

For enforcement, the Ontario Securities Commission runs a "boiler room unit" aimed at catching fraudsters whether they operate online or over the phone in so-called boiler rooms. The unit, which works with other provincial regulators, the RCMP and U.S. law enforcement, starts its own investigations, but it also takes investor tips.

At the end of March, 2008, the OSC said it had obtained freeze orders on operations that had amassed $16-million through fraud since the boiler room unit was launched in mid-2007. "Any time an investor is out there and they see advertisement, tips, or promotion material that they're not sure of, and they think it's a scam - they should contact us," Mr. Dickey says.

Securities regulators also put some responsibility in the hands of the self-directed investor. "One way to avoid fraud is to know your goals," Mr. Dickey emphasizes. "What kind of investor are you? What's your risk tolerance?"

Keep reminding yourself of those points and you'll also avoid investments that just aren't suitable for you, he says.

Special to The Globe and Mail

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