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Interview with Leon James

Individual Investor -- finance magazine.  Michael Hirson  Tuesday, 29 August 2000

Stock Rage: Hostile Behavior on Message Boards Devoted to Stocks

Dr. James; Since you've done so much with Internet message boards in the course of your research, I was wondering if you have any thoughts on the hostile behavior seen on message boards devoted to stocks.

We're doing a piece on a phenomenon we're calling "Stock Rage," which explores the increasingly visible rage that individuals show towards other individuals and institutions that have negative things to say about a given stock. Is there any link between the anonymity of the Internet and the anonymity of driving that causes such hostile behavior? Let me know if you have any thoughts on the matter.

Looking around for examples of "stock rage" on the message boards, I have found stories of woe on how people lost money, etc., but not anger/rage against someone or company executives. Do you have such cases in mind? So far I can say one thing I observed in these message boards: There is the illusion of getting the inside scoop on stock dealings. This is a very strong social atmosphere that makes people vulnerable to misinformation, either unintended or intended (as in the case of a con or set-up deal).  Millions of people go to these message boards every month. Most are visitors and do not post messages. They are the most vulnerable too since they try to assess the value of information they find there.

Here are some examples I saw:

"Some miners with proven reserves"

"Don't miss the gold thing"

"Look into this and you'll see that gold is undervalued right now"

"you should pay a visit to"

"I'm riding a saw horse--It's time to move on.  Might as well swing the

bat again and hope for a home run"

"request an investor packet and see for yourself"

"I have a good feeling about this one"

etc.

The reader or visitor assumes that these are real people and not con people. In a certain percentage of the time, they're wrong, and then they get hit. If I encounter rage incidents I will be able to give you an analysis.

You asked about stock rage" in relation to "road rage."This is indeed a useful comparison. In both cases there is a similar inability to let go of the desire to punish and retaliate. There is a similarity between drivers who feel disconnected from traffic in a "me against them" philosophy and attitude. The road rager feels violated as a result of someone's careless and uncaring attitude. To maintain self-respect the road rager feels compelled to retaliate. Similarly, stock ragers feel an attack on their humanity and self-worth. They feel betrayed and personally injured. It's not merely the loss of money that sets up rage conditions. There has to be the perception or belief, accurate or not, that there has been betrayal of trust and punishment or retaliation is necessary as a defense against feeling worthless as a human being. So trading facilities should guard against these impressions of being uncaring and anonymous agencies, if they want to protect themselves from incidences stock raging.

When traders see a message that carries negative information in relation to a company they're invested in, and if they perceive the information to be false or inaccurate, there is a strong tendency to view the negative information as dis-information, that is, the evil attempt on the part of the message bearer to hurt and injure the investor. Dis-information thus becomes a powerful weapon by which to manipulate beliefs and expectations. It is also a fundamental threat to the investor who is tied to that stock. But in order to act on this belief, the trader must also loosen the social and legal sanctions one feels in expressing aggressiveness. It's the combination of disrespect and perceived attack that produces stock rage. If your readers would like more information on the rage phenomenon, we give the context and the solution in our new book. I'll write more if I find evidence of stock rage that I can get hold of.

Leon; Thanks for the great insight. Rather than have you go out of your  way, I'll forward you a couple of examples of "stock rage" that I have found on the message boards. It's really an interesting phenomenon.

Here are some examples of "stock rage." In early July, Salomon Smith Barney analyst Jonathan Joseph downgraded a high-flying semiconductor maker called Silicon Storage Technology. The outcry was so intense among SSTI's fans that Joseph actually received death threats in response. Here are some postings on the message boards related to the incident.

Makes for interesting reading, at the very least. There seems to be a pronounced theme of persecution, that these institutions are deliberately scheming to rip off individual investors. Interestingly, message board posters often assume that other individuals who post negative comments on a stock are "bashers" who are paid by short sellers to bad mouth a stock and drive down its price. That can be seen in the following post:

Thanks for the message board links. I've pasted below my notes for you. This includes my earlier message and what I'm adding now, after viewing those messages. While looking over some of the message boards for stock traders, I observed that there is the potential for falling into the illusion of getting the inside scoop on stock dealings. This is a dynamic social atmosphere that leaves people vulnerable to misinformation, either unintended or intended (as in the case of a con or set-up deal). Millions of people go to these message boards every month. Most are visitors and do not post messages. They are the most vulnerable since they each try on their own to assess the value of information they find there.

Here are some examples I took from statements made by various posters:

** "Some miners with proven reserves" (BUT: how valid was the data used in the "proof"?)

 **"Don't miss the gold thing" (BUT: what if the trend reverses all of a sudden?)

**"Look into this and you'll see that gold is undervalued right now" (BUT: what if some of the assumptions made are not valid?)

**"you should pay a visit to" (BUT: can the information be trusted?)

**"I'm riding a saw horse--It's time to move on.  Might as well swing the bat again and hope for a home run" (BUT: what if the hope is disappointed?)

**"request an investor packet and see for yourself" (BUT: can the information be trusted?)

**"I have a good feeling about this one" (BUT: what if your feeling

deceives you?)

**etc.

The reader or visitor assumes that these are real people and not con-people. In a certain percentage of the time, they're wrong, and then they get hit. They then have a horror story to tell. Here's a definition of "stock rage" in relation to "road rage":

In both cases there is a similar inability to let go of the desire to punish and retaliate. There is a similarity between drivers who feel disconnected from traffic in a "me against them" philosophy and attitude. The road rager feels violated as a result of someone's careless and uncaring attitude. To maintain self-respect the road rager feels compelled to retaliate. Similarly, stock ragers feel an attack on their humanity and self-worth. They feel betrayed and personally injured. It's not merely the loss of money that sets up rage conditions.

There has to be the perception or belief, accurate or not, that there has been betrayal of trust, and punishment or retaliation is necessary as a defense against feeling worthless as a human being. This implies that trading facilities should guard against these impressions of being uncaring and anonymous agencies, if they want to protect themselves from incidences of stock raging. When traders see a message that carries negative information in relation to a company they're invested in, and if they perceive the information to be false or inaccurate, there is a strong tendency to view the negative information as dis-information, that is, the evil attempt on the part of the message bearer to hurt and injure the investor. Dis-information thus becomes a powerful weapon by which to manipulate beliefs and expectations. It is also a fundamental threat to the investor who is tied to that stock. But in order to act on this belief, the trader must also loosen the social and legal sanctions one feels in expressing aggressiveness. It's the combination of disrespect and perceived attack that produces stock rage.

Here are selections from the links you gave me:

Wednesday, 5 Jul 2000

That analyst is a F**KING moron, how does a company that just came out and said they cant keep up with demand seem to have a building up of excess inventory????? read the article from cnbc. He missed the boat on SSTI so he decided that to get it back he had to bring down the entire sector....unbelievable how far these people will go to get a stock where they want it.....I'm very grateful for the opportunity to buy more at these levels....I will never listen to any analyst because they have no clue about anything and all they want to do is ROB us of shares, WELL NOT ME!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

===============

I just emailed that f**king Moron at SSB asking for his rationale on his rating on SSTI. He really needs to get a clue about what is going on in the real world of SSTI.,

===============

I just emailed him also....thanks for the email address

Dear sir, I was thinking about coming into SSB and opening an account but after I have seen this downgrade in the chip sector, I have lost all respect for

SSB. Basically, I feel as though you are using your power to release a downgrade on a whole sector without identifying certain stocks particularly so you can buy in lower and take advantage of the robust earnings ahead. Thank you

================

So help me god if I see a SSB buy block for SSTI today I'm gonna go berserk.... Down with SSB.....and all the idiots working there.... Just look at how they have been doing in the past 2 weeks..."####"yst downgraded CPQ about 1 week ago and everyone came out and bashed that decision and reiterated strong buys or buys....And now this week SSB downgrades the whole SEMI SECTOR...what gives....look for heads to roll when this doesn't pan out.... I think they lost a lot of potential customers...

=================

I think we should complain to the SEC for stock fraud if people see SSB buying big blocks of the stocks they downgraded. I fail to see what the difference is between them and "pump and dumpers" that have been targeted by the SEC, except that they have hurt a lot more people. This is outright stock fraud as far as I am concerned. Another thing may be to write to places like theStreet.com and get them to write articles about this. Please post if you see big blocks or any blocks going by from SSB on this stock, I don't have Level II, and I will copy it and send a letter to them.  WDYT? anyone?

==================

THIS IS SOME KIND OF SICK JOKE. EVERYTHING I LEARNED IN COLLEGE IS BOGUS. ABSOLUTE BOGUS. I MEAN SSB COMES OUT WITH THESE REMARKS AND SENDS THIS STOCK TUMBLING. NOW I SELL AND BITE THE BULLET. NOW IT RETURNS AND WELL FRANKLY MY DEAR I DON’T GIVE A DAMN. GOOD LUCK TO EVERYONE HOLDING ON TO THIS STOCK, BECAUSE I SHOULD HAVE INSTEAD OF LOOSING OUT.

====================

SSB and anyone else who bashes a blowout company ahead of blowout revs and profits are no better than common criminals trying to steal your money!!! I am turning off my computer until the 22nd to minimize stress but after that we will get our money back plus the gains that are due us. The power of the big boys comes directly from the little guys. I am not giving it to them anymore. They can suck my ....

===================

Wanted Johnathin Joseph Dead or Alive Not  For Violating SEC securities Fraud  Why isn't this idiot arrested yet

===================

Remember "They make money the old-fashioned way.....they burn it" SSB = Idiotland (those not on the boat) Good to see CNBC just bash SSB and bring on analyst after analyst basing their report.... If they hit SSTI why didn't they hit ATML? Seems like they might have a large holding in ATML? This is all a bunch of BS....All day yesterday on stock pickers CNBC shows you heard chips and fiber optics are the ones to hold in your port... Where did SSB get this information from. I want to see people quoted as to "the best is behind us"

=======================

IF YOU BASHER MORONS DON'T LIKE THE STOCK, WHY ARE YOU WASTING YOUR TIME WRITING THIS CRAP? WHY DO YOU FOLLOW IT AT ALL? GO SURF FOR PORN OR SOMETHING. OR DOES THIS GET YOU OFF?

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These excerpts show the feeling of being betrayed and so, justified in expressing hostility. These types of opinionated interactions and aggressive reactions are predictable behaviors within the social environment of an online community. Expressions of hostility are inhibited under face-to-face conditions because they are socially unacceptable. But online communities allow the anonymous expression of aggressive emotions, and even if the writer is known, there is still a distance due to the online nature of the interactions.

I once ran an experiment with my classes. Everyone was required to participate in online discussions, but on some semesters they had to use their own names while during other semesters, they were allowed to use nicknames. There was a tremendous difference between the signed and the anonymous exchanges. As soon as they were given the anonymity of nick names they acted like something was let loose socially, and people started to post all sorts of provocative messages, even though they knew that the instructor knew to whom each nick name belonged. Many messages became sexually explicit, vulgar, aggressive, and abnormal in many ways. Thus, anonymity liberates the expression of emotions and thoughts that are normally disapproved of and thus inhibited most of the time. Just email me if you have any additional questions about this!

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