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Benefits of contrarian viewpoints – 100% accuracy, 602 points, 22 for 22 picks all in same sector

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November 30, 2009 – Comments (3)

I know some of you active traders out there have at some point considered something similar to what I was just thinking...

I almost hate to screw up any strategic testing plans by reading my sectors like the post title, but I wonder should I actually keep on with the same (incorrect or unlucky, apparently) thinking BUT just do the exact opposite, would I be making those numbers still...or would I be just as likely to increase winning % using any form of this logic by hitting a roulette table and calling the opposite of every red/black bet placed (I don't/have never played roulette by the way, but I think we all get the concept here).

See, it actually reads 0% accuracy and minus (-) 602 points on 22 tickers on my (dedicated short-bias funds) sectors tab...

Anyone ever tried my (or some form of a) 'contrarian gambling method' with themselves or another player (obviously hedge your losses to avoid rating hits if you have only one CAPS account and want to still play like this)?  I was just thinking about trying to see if there is anything to gain here or if my mind is reaching for invisible straws…So, first take sector out of the equation (or plan to use only inverse-index/short-bias sectors if available), then let's say you find an all-star, favorite, or friend you find suitable (how to do this discussed in detail below, but for now, more active player/traders are most well-suited for the experiment); check their sectors tab while displaying 'ALL' (not just actives) and look for any sectors that stick out (short-bias fund sector is ideal for simplicity, but only if criteria still match) due to numbers like 22 of 22 picks (100%).  Ideal pick criteria for any specific sector is >20 picks at >90% (actual loss percentage) / <10% (CAPS on-screen/displayed percentage), made on a timeline that is <6 months out for the oldest pick used in the calculation.  Time is the least crucial factor (as long as its not older than March of this year) and flexible depending on strength of other two variables, but do prefer to have less open than closed picks (35/65% active/ended limit target) with more than a 500 point sector loss {<(-)500 points}.  Now, when there exists a match or set of matches to the above screening/criteria set of rules (I haven't actually checked CAPS to see if there is anyone who can meet that criteria, and I won't be doing so this week either:>>), you will follow a basic methodology (that can be slightly subjective) to make the initial player/sector selection(s) to test run for the experiment.  After selection, the basic concept is as simple as doing the opposite of your subject.    

The (pre-screened) player/subject can be picked for whatever reason you deem most appropriate; a personal friend, intuition, a player with known tendencies to make picks based on certain stimuli, a player with applicable expertise that has historically and consistently affected their picks in the same manner and somehow influences picks in the sector of interest for selection (short-bias funds sector or otherwise) AND in all cases, if possible, how the player's pick style affected the timing of open/close positions and demonstrated a recognizable or trending correlation for how the player decides positions so you can trend the activity you are focusing on is of key importance to measure past & possible future/ongoing performance as it relates to your (contrarian) picks.  SO - selection is pretty basic with short-bias fund sectors (timing is key and pre-screening criteria handles most other initial concerns), but can get more complicated depending on the other types of sectors that can be used.  Basic selection criteria will vary depending on the level and/or source of knowledge of player performance gathered from the data in SECTORS tab and CAPS profile or personal observation/research, but any trends/tendencies that are applicable in the sector you are using for the player you are using are good to note to assist in measuring results and performance. 

NOTE 1** (SKIP IF YOU EVER TOOK FINANCE) Remember, in the original example (my real CAPS example) you are actually reading 22 for 22 LOSSES or 0% accuracy and minus (-) 600 points.  Ideally, you want to have a somewhat even distribution of points between those 22 picks to avert implementing strategy w/o even weight among picks; i.e. 500 of 600 points in 2 of 22 picks only gives the other 20 picks weights of 5pts a piece --> as a contrarian, those two picks are the ones that hold 5/6 of all utility for you so this obviously wouldn't be a test subject worth the risk of using in the experiment.  Same concept as portfolio management / spreadsheet functions to analyze your portfolio....

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OK, you have selected the top player/subject candidates, keeping in mind the sector of the player's picks that were most instrumental in the decision(s), what next?  Personally, I'd try running a few simultaneously with the screened short-bias fund sector picks as well as any other subjects you identified based on other sector pick trends with which I'd also run using the pick method below; both for a few months minimum to see if any noticeable benefits/gains are achieved with any of them.  If so, capitalize on the results and make some money (keep in mind how many variables are involved here making it such a risky venture)!! Just be sure your test subjects don't find a new way of choosing and/or timing their picks, and if they do - adjust or discard as necessary in a very prompt manner.  Keep records and report performance to see how this method relates to other investment options available to you.  

Example of Pick Method with Sample Subject and MULTIPLE SECTORS:

USDollar(OR oil/crude,barrel,spot,etc.) / GOLD & PLAYER (not real example) = Uncle who consistently buys gold at peaks due to habit of 'chasing' stocks and has 5% accuracy with 30 gold/mining equities and related investment instruments (Gold coins, Gold spot positions in an online account, etc.) all but 5 closed positions has lost $25000 on $5000 investment in 6 months.  Would not even need CAPS to fill in variables with such an extreme example, but for GOLD simply = sell@buy / buy@sell <--same for any short-bias funds or anything where timing is the only material factor in taking s position(s) ALSO open USD(or oil)@buy-gold / sell USD(or oil)@sell-gold; important to note here is that while I may have preconceived notions about relationships between USD/Oil/Gold (or ANY set of equities or commodities), to be most effective (possibly) in this method, I'd pick a set of equities/commodities/sectors that 1) Are simple index-matching funds or short-bias funds OR 2) from your understanding of them, will affect the value of the other in as direct/consistent a manner as possible, whether it is an inverse or direct correlation. 

INTERESTING (I Think)... ALL equities DO relate to others at varying degrees (no matter how indirect the manner or if it's enough to even be measured) depending on way too many variables to predict w/any precision - Remember, we are doing the opposite of what 'player Uncle X' thought in his capacity would be the correct move.  The point here is CONTRARIAN performance results based on a tailor-picked player's views on a specific data set of picks that are best-suited to your knowledge, including that of the current economic variables that can affect these picks - SO, whether X/Y is zero-sum opposing or opposite end of spectrum in your view will be treated the same only to the degree that you think it should.  But again, to simplify the exercise, dedicated short-bias funds are easier to use here because they do not need to involve any of those extra variables extending beyond timing.  A good medium ground could be the sole incorporation of sector-specific bull/bear funds, but you can also put into play the performance benefits/hinderances associated with opposing picks of sector-specific leveraged funds - IF you really want to take it that far in assessing a target 'player' suitability for this experimental method (which I would not...not cost/benefit effective even if statistically it turns out to produce gains, that time could be much more well spent on generating gains that you wouldn't need a calculator or report to recognize). 

O/T Leveraged-fund note/question: 

{{...I do remember reading some recent CAPS blogs suggesting the simultaneous green-thumb/red-thumb of sector-specific bear/bull funds that were reported to be giving players consistent score gains by capitalizing on the apparent mathematical constants inherent with daily leveraging functions necessary to equal the stated performance of the funds, though I doubt seriously if you take into account broker/account trading fees associated with real-life portfolios that fund-managers and financial regulators would allow this to continue if anyone could still net profit repeatedly by essentially taking NO-RISK positions in an equities market. (that's the kind of thing only government and too-big-to-fail banks get to do, haha...though B.Madoffs of the world possibly reported the ability to accomplish this for investors) ANYONE THAT HAS ACTUALLY DONE THIS OR HAS THE BLOG LINK, FEEL FREE TO REPLY TO MY BLOG...}}  

To use this method on one's self does not seem, wait, is NOT feasible.  I can try to 'think the same way', but there is no way to avoid some degree of bias that would skew the results.  Any thoughts, comments, appropriate volunteer 'players', criticisms, feedback, and/or suggestions are welcome.  Of special interest would be ideas about subject selection that would promote the greatest resultant ‘automated’ gains/returns based on this method.  Or, if you are familiar with any similar concepts set to achieve the same goal with some possible operational modifications, please share.

Thanks for your time if you read this…and yes, I definitely went off on a tangent that could have been time probably used much more wisely - I’ve become more aware of that possibility now that I’m finishing typing!!!  I guess what got me going initially was seeing how the vast majority of CAPS players red-thumbed picks for addt'l score points and wondered if no players in the top 10 were 'YES' charm players, then maybe there was a way to take advantage of using the opposite of the best players red-thumbs score points and this is where I got............you're thinking it I bet....I didn't really get ANYWHERE!!! haaha...

**Oh well, maybe I'll get something out of testing the merit of benefits achieved/possible by viewing things (investment tools/ideas to be exact) from a completely oppositional perspective, BUT w/o the built-in bias we all have that is what keeps this method from being feasible to use on one's self...of course the conclusion could very well be that it has little/no benefit !!!

Fool on!!!  And if someone does this and makes over 100K, just e-mail me for the address to send my check....

cashkid79

3 Comments – Post Your Own

#1) On November 30, 2009 at 8:50 AM, cashkid79 (93.46) wrote:

STOP!! Just from your post I can definitely say that you should not consider doing anything I suggested in the blog with any real money...and payday loans, well, I don't know much about that but I do know that I cannot stand spam, especially in a forum like CAPS, so...

I'd never actually do that with real money unless in the highly improbable event I found a way to make it profit consistently with reliable inputs (unlikely as I don't have the time to actually test it, but you should feel free to do so and let me know), and even then, it would take close to a year of consistancy with extremely good returns before I'd feel comfortable allocating 3% of my total portfolio to the venture on a very limited time frame, and that 3% won't be much considering I am in school full-time at the moment...research and knowledge are the best tips for lots of things, investments included - had you researched me, you would have seen that my views would likely be more like -

--Payday loan companies are usually run in a manner resembling someone taking advantage of another person that has financial/liquidity problems (no money) for the purpose of personal gain/profit -- much of the reason that our economy has gotten to the point it is now -- a very similar mentality was shared by some greedy individuals (many whom were executives in 'mainstream finance') looking to continue increasing profits when it was no longer ethically or responsibly possible and with no concern for the consequences or the effects it would cause at some point down the line...

**Oh well, maybe I'll get something out of testing the merit of benefits achieved/possible by viewing things (investment tools/ideas to be exact) from a completely oppositional perspective, BUT w/o the built-in bias we all have that is what keeps this method from being feasible to use on one's self...of course the conclusion could very well be that it has little/no benefit !!! 

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If not for this unexpected tidbit when I was finishing up, I doubt seriously I would have posted this...the only investors who I intended for that to be any use to are those with enough money to open their own payday loan shops as an alternative way to kill time in lieu of a trip to the casino, etc...and actually, in all truth, I am/was going to link it to a current professor in hopes for possible extra credit or at least so that he can be aware of my CAPS activity; plus it's just good to network as much as possible when you are interested in doing anything in the financial or investment worlds, UNLESS you are looking to encourage/offer/spam payday loan services to the people you are wanting to network with! <-- another great tip for you, and free!! 

Problem now is that the only reply to this blog happens to be from someone w/no history suggesting I check out a link on payday loans...not quite what I had in mind, no offense...

cashkid79

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#2) On November 30, 2009 at 9:25 AM, cashkid79 (93.46) wrote:

Ohhhhh...OK it just dawned on me why I got a spam link for payday loans in response to my blog (which I kindof took personally, having only about 10 blogs ever...)

Can one reputable member give me an honest response as to the image I portrayed by posting a blog based on a ridiculous scheme more suited to a creative writing forum apparently, but which I posted anyhow for the one useful tidbit I unexpectedly came to at the end...

I ask because now that I'm looking I can see how this blog might come across and seriously hope noone goes and just invests their money in a method I construed on the fly one evening and probably is very likely to lose BIG --- this was NOT the intended message I wanted to get across...just the last part about individual psychology as it pertains to investment decisions <---that paragraph out of the whole post is why I posted it....should I really have clipped the rest?...curious at this point what active CAPS bloggers have accepted as the norm for blogging etiquette here as much as I am curious what people pull as the main message from what I blogged...

cashkid79 

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#3) On November 30, 2009 at 9:38 AM, cashkid79 (93.46) wrote:

well at least I know what TMF got from the blog...my only comment just got erased, and rightfully so as it had a link to some freemoneyhereyagoclick dot com <<---(just made that up too BTW) positioned at the end of a rant against the government treatment of the financial industry and favoritism as a comparison between payday loan stores and Federal banks???

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