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alstry (35.42)

A perspective on PERFORMANCE

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January 27, 2009 – Comments (11)

For a number of us "negative" players on CAPS, we have been scoring by shorting a variety of symbols.  Since CAPs is a relative game, it underscores short performance compared to real life.

Let me explain....if you are short a stock and it drops 50%, and the market drops 40%, in CAPs you score only 10 points(by beating the S&P by 10%) but in real life you make 50% on the equivalent play.  Trust me...I know from my personal real life portfolio.

The inverse analysis can be made in a bull market when you are green thumbing shares.

The irony is few really appreciate how increadibly difficult it is to score points shorting stocks in a bear market in CAPs.....it is much more difficult than in real life.

So kudos to all those players that had positive returns last year red thumbing stocks in CAPs, your accomplishment was quite remarkable.  And if you applied your approach in real life, I am sure a number of you are enjoying a fine drink reflecting on the amazing year you had last year.

PS:

Think about this one for a second:

If you green thumbed a stock and it DECLINED 30%, but the market DECLINED 40%, you would score the same ten points as if you red thumbed as stock and it DECLINED 50%.  In the former, you would have lost 30% in real life, in the latter you would have made 50%.

Now tell me this, who was the better player since both scored 10 points on CAPS, the one who make 50% in real life or the one who lost 30%?

Remember, Alstrynomics is all about character and competence.....especially in real life.

 

11 Comments – Post Your Own

#1) On January 27, 2009 at 2:53 PM, kaskoosek (53.16) wrote:

ALstry

You mean red thumbing leveraged ETFs right?

 

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#2) On January 27, 2009 at 3:18 PM, alstry (35.42) wrote:

It really doesn't matter what the symbol.  Any symbol you can play in caps, you can play in real life.

In Alstrynomics, a symbol is a symbol and its performance is what you play.  I don't distinguish between ETFs or individual companies.

I am competent at analyzing both...in the end you make your decisions based on the respective fundementals of what each share of each symbol represents.

Here on CAPs, it is investors helping investors while having fun in a competition.  Alstrynomics tries to take it to the next level and make it function in the real world as well.

Becareful about some of the top scores including mine, if a person is beating the current S&P by green thumbing long in a bear market, that person is still a LOSER in real life, just not as much a LOSER as the S&P.

Alstrynomics is all about winning, both in CAPs and in real life.

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#3) On January 27, 2009 at 3:38 PM, kaskoosek (53.16) wrote:

The best strategy to play is to bank on volatility rather than on fundamentals.

If you look at my score and picks you would notice that most of it is from mining stocks and being bullish on commodities.

I think it has more to do with timing rather than fundamentals. Don't get me wrong, fundamentals are still important to know what to invest in, but I think that the "when" is much more important in this kind of market.

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#4) On January 27, 2009 at 3:44 PM, EverydayInvestor (< 20) wrote:

Alstry - you miss the point about the scoring, as do most people. This is not a simulation of portfolio management but rather a simulation of being stock analysts. The presumption is that investors who use CAPS do not short sell. From that point of view, a 10% outperformance on a sell recommendation IS equivalent to a 10% outperformance on a buy recommendation.

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#5) On January 27, 2009 at 4:20 PM, alstry (35.42) wrote:

Everyday,

First let me get this past us.  Without a doubt you are probably the best fundemental analyst I have identified on CAPS.  I will be starting a new blog called PositiveAlstry for the sole purpose of identifying undervalued investments and ONLY undervalued investments.  The goal will be to identify companies with lots of cash and very little debt that can be identified as "deals."

I expect our relationship will be very different in that environment.

However, in the CAPS game in general, I disagree with your above premise.  I am not sure where you get your presumption from as CAPS allows, and almost encourages, short selling by permitting red thumbing.

So my bias is applying CAPs analysis to the real world as anything else would simply be living in fantasyland.

I look forward to applying strong fundemental analysis to individual names in PostiveAlstry with you in the future.

 

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#6) On January 27, 2009 at 4:40 PM, anchak (99.84) wrote:

Alstry- just do read up a little bit on the background of CAPS. CAPS was started as a Stock RATING game by the Gardner brothers - as a adjunct to enhance their Stock picking/Investing services/Newsletter etc....essentially a free way of garnering research and sentiment.

All their Services till recently have been RELATIVE metric ie compared to the S&P. That is appropriate to a LONG ONLY strategy - as Everyday points out. The fundamental rationale for allowing Red thumbing on CAPS - essentially to establish the Rating - not to the ABSOLUTE RETURN measure which you are alluding to.

Incidentally, I think if you start PositiveAlstry - my guess would be - that might become your more popular avatar in CAPS.

All the best!

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#7) On January 27, 2009 at 4:41 PM, jegr5347 (< 20) wrote:

You can be wreckless in CAPS in a bear market red thumbing to kingdom come and expect similar results to investing in the stocks PositiveAlstry will probably be greenthumbing.

Whereas in a bull market you can expect a CAPS portfolio to be very similar to a real life portfolio, for those who practice what they preach, the same can't be said about in a bear market as most prudent investors will have significant holdings in cash and consider additional expenses and unlimited risk to shorting.

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#8) On January 27, 2009 at 6:38 PM, Varchild2008 (83.79) wrote:

PositiveAlstry???  That person exists???

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#9) On January 27, 2009 at 8:03 PM, alstry (35.42) wrote:

Jegr,

My CAPs portfolio is not too different than my real life portfolio, however, my real life portfolio performed much better than my 17% average on CAPs in 2008.  MUCH BETTER.

As far as a bull market, I am willing to wager that my accuracy will be much higher than it is currently.

To me, there is no difference buying low and selling high versus selling high and buying low. 

Quite frankly, I lost millions personally learning how to short sell successfully with appropriate safeguards.  Short selling is not for amatuers and must be done with great care.

That said, if things ever turnaround, I have little doubt that those that follow Alstrynomics will be some of the highest scorers on CAPs.

What I find shocking is that CAPs has "Everydayinvestor" as a player while TMF wants to start their own mutual fund.  TMF would be much better served if they hired Everydayinvestor to counsel managing the fund then TMF trying to do it with its stable of English majors.

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#10) On January 28, 2009 at 3:02 PM, EverydayInvestor (< 20) wrote:

Alstry - Anchak argued my point and I think it is a good one. Also, I should point out that TMF isn't composed solely of "english majors". Anyway, I was a Psych major (and I actually wrote some articles for TMF as a freelancer). So don't knock English majors.

Anyway, I would not help run a fund. I already run a "hedge fund" professionaly (with myself and my wife as the only investors). One fund is enough. :)

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#11) On January 28, 2009 at 4:16 PM, alstry (35.42) wrote:

I knock economists and I have an economics degree.

Its all fair game.....knock knock:)

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