by Raven Lebeau

Created on: April 17, 2008

I've changed my mind. I do that when I'm wrong.

I once said that UGC is not evil.

I was wrong.

Recently, I was looking for news at my favorite supposedly-reputable site, Yahoo finance. I went to the section on MBIA, one of the underlyings for an options position of mine. I clicked on "headlines".

What I found next is too frightening for the faint of heart. (And no, not because MBIA is having financial issues. I knew that much, which is why I sell both puts and calls on the company.)

The "news" article under "headlines" on Yahoo finance was fed in from a UGC site called Seeking Alpha. My trusted news source was getting its content from the most despicable source imaginable- the masses. It was the silhouette/question mark avatar next to the writer's name that tipped me off. I don't remember what the article even said. I was too chilled to retain much of what I read.

"Any idiot," I said to myself, "can write an article and end up with it being fed to Yahoo finance? People trust Yahoo finance! They think it uses stories from real journalists, you know, the kind who lose their jobs if they lie or make gross factual errors. The kind who take some heat for being biased or self interested. But the truth is, any uncaring, Machiavellian, manipulative"

At this point, the proverbial light bulb flipped on over my head.

"Wait!" I told myself. "I'm any idiot! I can be Machiavellian and manipulative!"

Twenty minutes later, I had submitted an article to Seeking Alpha touting the virtues of MBIA. Yeah, I sold both puts and calls. But the puts were in the money. So I wanted their stock to go up. Not very much, not enough to put the calls in the money, but just enough.

The next day, my article was one of Yahoo's very few headlines on MBIA. "Credit where Credit is Due" with my pen name on the byline. I had reached the world. That's scary. For the fun of it, I googled my pen name and found that my little article had been fed to several other reputable-looking sites.

I believe everything I said in the article. I took a bullish position on MBIA for a reason, and I still believe that in the long run they'll be successful. Did anyone rush out and buy MBIA because of my silly little article? Probably not, based on the comments I got. (Hey, if I wanted to be popular, I wouldn't get to call myself a contrarian trader.) Even if someone did go out and buy MBIA, I don't feel guilty about that, because I think it's not a bad deal, if you like buying stocks (which I don't.)

But it's pretty scary that UGC has become virtually indistinguishable from news.

Today, it's some idiot touting a stock he owns. Tomorrow, will it be someone who flunked out of college writing about how to do a fun and safe chemistry experiment with potassium metal, water, and a match? Some moron without an electrician's license telling you how to wire your own house?

The standard defense of UGC is "caveat lector"- may the reader beware. But when it's so hard to tell a real, fact-checked source from the ramblings of a bored nethead, "caveat lector" is not an easy motto to live by. In essence, message boards have now changed their look, masquerading as news sites. Oh brave new world, that has such anonymous self-proclaimed experts in it.

Consider yourself warned.

But, for the record, if you see any of my articles on those shady sites, you can trust them. Honest. I wouldn't lie to you.

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