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reddingrunner (92.14)

May 2007



What price simplicity?

May 31, 2007 – Comments (3)

I just added this comment to my Apple recommendation.  Apple is (by far) the biggest stock holding in my for-real portfolio.  Bottom line:  Apple has a huge, often unrecognized moat...

OK, it's up 33% in the five weeks since I started CAPS and I'd still buy it today.  Apple has something no one else can match --- as complicated electronic equipment, from computers to phones to entertainment devices to etceteras, takes over our lives, the biggest challenge and drawback to consumer acceptance and full utilization wll be complexity and learning curves --- Apple does Simple better than anyone else, and it's too late for anyone else to catch up anytime soon.  If people want simplicity and ease-of-learning Apple will rock the world.  Target price = 1000, circa 2012.  [more]



Yadda Yadda

May 31, 2007 – Comments (0)

Since I tend to be a long-term buy-and-hold value investor, I'm a little surprised by how well I've done in CAPS over the short-term with (for me) frequent trading and a smattering of high-risk growth stocks thrown in.  I figured I would do well over five years or so, hopefully I won't be wrong about that also!

I have learned why I don't short stocks in real life.  Even picking "underperforms" in CAPS makes me nervous and I tend to get rid of them as soon as they drop 5%.  They just make me uneasy, even though many CAPS players ride to high scores by "shorting" one-star micro-caps.  Since I'm a buy-and-hold guy, shorting doesn't make sense for me or fit my psychology.

I've sold some other stocks just because I bought them on a whim and decided to dump them in favor of better choices later.  I'm trying to keep my portfolio to around 75 total picks; otherwise I would load up on stocks in my favorite categories (energy, financial mgt, etc).

I comment on every pick so I can remember later why I picked it!  [more]



Jim Cramer's accuracy rate

May 30, 2007 – Comments (3)

Quote:  "my most recent internal performance review found that the stocks I pick for the show beat the S&P 500 63 percent of the time."

Congrats to all CAPS players who are beating Cramer (currently about 500 of you, counting only those with 20 or more active picks).  Give me time, I'm heading that direction.



TMFEldrehad: How good?

May 26, 2007 – Comments (5)

Our fearless leader has had quite a run.  But how much should we depend on his picks? Taking a quick look at his active list as of Memorial Day weekend, his record (not including ended picks) is 96-94 and he's only over 50% because CAPS gives you a win on "underperforms" that don't keep up with the S&P- some of his "shorts" have gone up since he picked them, just not as fast as the market.  His points for these picks (if I added correctly) totals approximately 667 on 190 picks.

OK, it isn't totally fair to ignore ended picks, but then CAPS isn't totally fair either- he admits to gaming the system to a degree to get his score up.

OTOH, since his semi- "retirement" he has been doing quite well.  His active picks since the beginning of February are 14-5 with 444 points: very impressive.  There may be something to be said for being more highly selective with our picks.   [more]



Do I own all these picks?

May 21, 2007 – Comments (0)

No.  I would never own this many stocks (or etf's).  For CAPS scoring it helps to have close to 100 picks so I use CAPS as a sort of watch list: these ARE my current 75 (or so) favorites.  Owning more than 25 stocks makes no sense - you'd be better off just putting all your money in a couple index funds.  

You shouldn't have more than 10% in any one stock (and rarely should you have more than that in any one sector).  But if you don't have the confidence to put at least 4% in a stock (1/25 of your portfolio), you don't really believe in it and you're just indexing.  If you have mutual funds, you shouldn't have more than 10 stocks.  In real life my portfolio consists of less than 20 funds and stocks with Apple being my biggest holding.  [more]




May 12, 2007 – Comments (0)

Less than 10% of CAPS players can claim 50+% accuracy based on 20 or more picks.  In other words, you're better off investing in an index fund than taking advice from 90% of CAPS players. 
If you are like me, when you check out a stock's CAPS pitches, the first thing you do is re-order the pitches in order of player ratings.   Even then, before relying on one player's pitch you should be sure that their rating is based on a consistent record of good picks and not just a few lucky bets or frequent reloads.

Caveat investor.  [more]




May 10, 2007 – Comments (1)

I meant to tab PLA as "underperform" but I seem to have messed up and it shows up as an "outperform" pick (you can tell by my comment).  Now I'm stuck with it for 7 days, then I'll have to drop it and it will count against my accuracy (unless it miraculously outperforms).  Sigh.



Knowing where NOT to invest

May 08, 2007 – Comments (0)

Australia is my pick for best market gains (nation) for the next five years:  
1) Free market, pro-business democracy.  
2) Rich in natural resources. 
3) Close to China and India's 2 billion plus people.
Second place:  USA 

Ask yourself: if you were a young entrepreneur with a great idea for a new business, an excellent business plan and enough seed money to get you through the first few years- what countries would it be best for you to find yourself in - culturally, politically, etc.  What countries would be the least promising for our young capitalist (e.g., Russia)?
Rate the countries of the world (with markets) and stick to the top ten.  Going deeper than that is too much risk (not to mention too much diversification if you have invested in the top ten).  [more]

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