Investors have countless information outlets to help them shape their portfolios. Television networks, financial web sites, newspapers, analyst reports, company releases and magazines are just some of the high-quality sources offering tips, strategies and analysis for seasoned, and not-so seasoned, investors. But a source that investors are increasingly looking to for information and scuttlebutt are their peers, via online investor discussion boards.

Discussion boards are nothing new to Internet users and exist for a seemingly endless number of topics ranging from investing and insect collecting to video games and vegetarian cooking. For example, The Motley Fool hosts more than 4,000 discussion boards, the majority being about individual stocks, at its www.fool.com site. The Motley Fool's Real Estate and REITs discussion board is one of the most popular on the site and is praised by investors and industry professionals for offering a high-level forum for information to be exchanged. Other real estate discussion boards can be found at Yahoo.com, Investorschat.com and Talkstox.com.

"I find [the Motley Fool real estate board] a particularly good way of measuring investor sentiment, and seeing which issues investors find most important," says Tony Edwards, senior vice president and general counsel of NAREIT and long-time Motley Fool participant.

Peer-to-Peer Advice

"Between 'REITswain' and 'REITnut,' I think both make valid arguments and it just proves there are two sides to every coin, which makes the investment world interesting."

—An excerpt from The Motley Fool real estate board

The premise for a successful discussion board is for like-minded individuals to share their knowledge on a subject, while at the same time learning some things they may not have already known. Investors from all walks of life log on to The Motley Fool's real estate discussion board to post their questions, answers and philosophies on investing in real estate stocks. All this, ideally, is done in an ongoing, intelligent series of posts on the board.

The Motley Fool encourages active and open debate among members, on the condition that "it's done in a lawful and civil manner," and most posters follow this rule of conduct. As Jim Luckett, a real estate industry consultant and active participant on the real estate discussion board says, "it's almost always conducted in a very civil manner. Anytime anyone does start getting negative or personal, we all encourage them back to a more civil tone."

The self-policing of most discussion groups has a direct impact on the quality of the conversation since many boards do not have active moderators from the hosting company. As a result, anyone participating on a discussion board must be mindful that there is no "big brother" to intercept any false or misleading information. And while The Motley Fool doesn't have an actual moderator, there are company employees with the prefix "TMF" on their screen name who can access the board and help if there are any problem posts.

Take It With a Grain of Salt

"I hear all the time from folks who proclaim, 'my total return over this or that period was better than so-and-so's' or 'the best in the sector.' Looking at total return over short periods—though interesting—is hardly a definitive gauge of determining a great, or even a good stock."

—An excerpt from The Motley Fool real estate board

Any information found on any discussion board—no matter how reputable—must be taken with a level of caution. As long as a board is open to the public, there is the risk of people who will offer misleading information, bogus investment schemes, self-promotional material or false information about a company.

While any information outlet that helps spread the advantages of the publicly traded real estate industry to a wider group of investors is a good thing, real estate companies remain cautious about directing investors to the discussion boards. Sara Grootwassink, chief financial officer of Washington Real Estate Investment Trust, says the value of discussion boards in general is somewhat suspect. "I think you have to take all of these sites with a grain of salt. Some people can learn enough to become dangerous, which is not a good thing," Grootwassink says.

Founding of a Fool

"The ability to exchange information with intelligent fellow investors has been unique. This board has enlightened me, and [at the same time] put up with some pretty stupid questions (mine)."

—An excerpt from The Motley Fool real estate board

The overall lack of problems combined with the high quality of its participants has made The Motley Fool real estate discussion board the forum of choice for many investors and industry professionals. The popularity of the company's discussion boards validates its origin stemming from a perceived lack of financial information for the general public. Brothers David and Tom Gardner founded The Motley Fool in 1994 with the goal to provide quality financial information to the masses, regardless of education or income. The Motley Fool started as a partnership with Internet giant America Online, and soon thereafter the company became its own entity.

The name "Motley Fool" comes from the beginning of William Shakespeare's "As You Like It," where the court jester (the fool) was paid to entertain the king and queen with self-effacing humor that instructed as it amused. The Gardner brothers liked the fact that the fools were the only members of society who could tell the truth to the king or queen without having their heads chopped off. That concept is carried over to The Motley Fool where investors can learn the stark truth about investing, while being "educated, enriched and amused."

The Discussion Board

"In many ways, this community has become our passion and our life's work here. We believe there's something different, and special about this place. We don't think it's easily duplicated. We don't believe messaging technology anywhere can create the magic and camaraderie that exist here."

—A post by Tom Gardner on The Motley Fool real estate board

The Motley Fool quickly saw the popularity of its discussion boards flourish, and soon the site had thousands of different boards, many created by individual members to address a specific investing niche—be it a sector or an individual company. Anyone can start a discussion board on The Motley Fool—the only requirement is having a solid theme or purpose.

"The discussion boards started not so much out of market conditions, but our desire in 1996 to start a specific industry area," says David Forrest, senior program manager of The Motley Fool. "In the case of the real estate discussion board, Michael Dowd, a long-time friend of the Fool and industry professional, was invited to be a real estate industry host. It was our strategy to go out and get some smart people in the industry and open up an area for them to come and talk about [real estate]."

The real estate discussion board is largely devoted to publicly traded real estate companies as the codenames of some of its posters like "REITnut," "REITlover" and "REITster" clearly illustrate. Conversations on the board deal with everything from good-natured debates on which specific real estate stocks are risky, to discussing the merits of investing in REIT preferred shares versus REIT common stocks, as well as a stock-picking contest among participants to find the best-performing companies for 2002.

What Kind of Fool Are You?

I've been looking to get into [investing in] apartment REITs. I'd sure appreciate hearing more about why you choose to be so heavily invested in them."

—An excerpt from The Motley Fool real estate board

The Motley Fool Real Estate and REITs board somehow manages to serve two distinct audiences: educating relative industry novices while at the same time furthering debate among seasoned REIT pros.

"I think the majority of participants are individual investors, a very large part of which are probably retired investors, people who are looking for security and a good, reliable source of income," NAREIT's Edwards says. "But there are a number of posters who are dedicated REIT investors as well as institutional investors."

Part of the lure of the board may be that publicly traded real estate—and investing in general—is a challenging enterprise involving a broad range of companies and various market dynamics that make it nearly impossible for anyone to know everything there is to know about the industry. Even someone who literally wrote the book on investing in REITs finds The Motley Fool discussion board educational.

Ralph Block, executive vice president of Bay Isle Financial and author of several leading books on the REIT industry, says, "I've been a professional REIT investor since 1993, and I've been investing in REITs going back to 1975. I manage a REIT mutual fund, which is about $100 million, and so you could say, 'is there anything on the board for Ralph to learn from?' The answer is yes. No matter how knowledgeable you think you are, you can always learn from other people and their experiences."

Block adds that there are other message boards dealing with REITs but they are either not active enough or the intelligence of the dialogue is completely sub-par in relation to what The Motley Fools real estate board offers. Edwards agrees, adding, "The analysis on The Motley Fool is phenomenal. I've been to other boards, but in my mind nothing compares to the level of civility and the depth of analysis."

Paying the Price

"This board is worth way more than $30 [per year] to me, and I will stay with this community whatever everyone decides. The fee is annoying, but it is also nice to be able to go back and look at the old posts sometimes, which we would lose if we went elsewhere."

—An excerpt from The Motley Fool real estate board

The Motley Fool real estate board was one of the first free discussion boards focused on the industry and was able to build a reputation and a user base that few sites have been able to challenge. But like most Internet-based companies, the economic picture has been less than rosy. The company has had to alter its business strategy as a result of the struggling economy. Due to disappointing advertising revenues on the site, The Motley Fool began in February charging users $29.95 per year to access all of its discussion boards. The move comes on the heels of the company's decision to cut its staff by 75 percent in 2001.

Charging for the message board is part of the company's ongoing effort to increase revenue and expand its offerings, says Daniel O'Brien, an analyst for Forrester Research who follows the company.

Only time will tell how participants will respond to the new fee-based service and if it will hurt activity and the usefulness of the board. To help encourage users to pay the subscription fee, The Motley Fool is planning to provide incentives and additional services. "We'll constantly improve the community as always, and one of the things we're going to be doing now that we've got a paying membership is surveying the members and seeing what they would like us to offer," Forrest says. "We've got some of our own ideas, like private boards where you can have visitation only and that sort of thing. But it's going to be largely dictated out of a conversation between company executives and the paying membership."

Some of the real estate board's participants are worried about the effect the fee will have on the board. "I'm sorry to see it imposed, but I hope it's not a negative," Luckett says. "When something is working, you hate to see a major change put on it. [The yearly fee] might cause a big reduction in newer people participating, which would be a shame. It's great for the industry when new people log on and ask questions."

On the flip side, a fee-based service could be good in that it would help weed out those participants that do not bring anything to the table. "I don't think it will make much of a difference because the people who are active on the board are sufficiently interested and will realize the annual fee is such a small portion of what they have invested in the REIT industry," Block says.