AGORACOM Small-cap Investor Relations Blog

If Thurston Had Internet, He'd Be Trading From Gilligan's Island

I know this doesn’t come as a surprise to many of you but there are still a number of CEO’s out there that continue to believe online traders are – for the lack of a better word – flakes.  They fail to realize that online investors are take charge, self-directed, open minded and very intelligent.  I know this because I’ve watched them for years on AGORACOM and blogs around the web.

For those CEO’s that don’t want to take my horribly conflicted word for it, you might want to take a look at this article in the Wall Street Journal:  Some Millionaires Trade Online.

(UPDATE:  It looks like the WSJ no longer has the story available – but here is a cached version of the article)

The article specifically talks about Canada – but I think we can all agree it applies to US online traders as well.

You can continue to ignore online investor relations – but do it at your peril.

Regards,
George

For months I’ve talked about the loss of trust being the greatest risk to markets.  Specifically, investors can flow with market cycles and always come back.  However, if they lose trust, it will take a long time for Wall Street to gain them back.

Thanks to information provided by Dominic Jones over at IR Web Report, that trust is officially broken.  He cites a number of reports here, here and here – but here are some of the highlights, starting with this telling graphic:

• Nearly two-thirds of investors (62%) trust corporations less than they did a year ago.
• Only 38% said they trust business to do what is right, a 20% plunge since last year.
• Only 17% said they trust information from a company’s CEO.
• In China, the “trust in business” score actually rose from 54% to 71% among 35-to-64-year-olds.
• Specialists remain the most trusted purveyors of information about a company, with 62% globally saying an academic or expert on a company’s industry or issues would be extremely or very credible.
• Employees and peers are also considered credible sources of information about a company, with 47% trusting what they hear from “a person like yourself” and 40% trusting conversations they have with employees.

In short, investors don’t trust Wall St CEO’s – but they do still trust people like themselves.  This tells me quite clearly that there is no better time for a grassroots investor relations campaign by small-cap companies.

Need another sign of the people times?  Obama went grassroots and it resulted in the election of the first ever Black President of the United States despite daunting odds from both within his party and amongst voters in general.  Your personal politics aside, the man proved the power of connecting at the ground level when the ground level had little trust in the upper echelon.

Wall Street is out of favor … waaayyy out of favor.  Take advantage of the environment, get out there and show investors why you and your hard working small-cap company can be trusted.

Regards,
George

Google CEO, Eric Schmidt recently sat down for an interview with Charlie Rose to discuss a wide range of topics related to technology, the future, etc.   In the flurry of information, it was a great interview, the most relevant to the small-cap industry is that Bill Joy uses search engines to find new investment opportunities. An excerpt from the transcript can be found below.

What does this mean for you? If someone like Bill Joy, with every resource and ear to the ground sources accessible to him, uses search engines to find new investment opportunities, you’re simply a damn fool for not believing or understanding that small-cap investors use search engines to find their next great small-cap investment.

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Regards,
George

“AT his first press conference Monday night, US President Barack Obama made
history at 8:52 pm ET by calling on blogger Sam Stein of the Huffington Post
to be among only 14 reporters to ask a question.”

Dominic Jones
IR Web Report
Time To Open Up Your Earnings Calls To Bloggers

President Obama’s recognition of bloggers as a primary source of information, is a massive wake-up call to small-cap CEO’s and investor relations officers.  If you continue to believe that mainstream traditional media outlets are your only target market for mass communications, then you are missing out on what is arguably the better, faster and farther reaching way to get your message out to investors – the blogosphere.

Actually, the blogosphere is far too limiting of a term – but I haven’t thought of one that best encapsulates blogs, micro-blogs and online financial communities.  For now, let’s not worry about that because the important thing is to understand that a bigger, faster, more targeted reporting system is growing every single day – and it is never going to look back.

More than just lipservice, Dominic Jones summarizes this point perfectly in his following excerpt:

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65% ….. 65%.! That is a huge number – and I guarantee you it is only going to get bigger with every passing year.  That is good news for small-cap companies that have embraced Web 2.0 – but for the majority that don’t understand the phrase “independent non-broker research sources” …. you’re in trouble.

Regards,
George