CAPS and TMF - A Look Back
It was just over 4 years ago that I was invited to participate in the beta version of CAPS. Being an anniversay or sorts, that calls for a look back.
I didn't jump at it right away, but once I did give it some consideration, I was very much intrigued by the potential for this user-based network of stock rating / recommendations. I'm a big believer in what Alvin Toffler terms prosumerism i.e. making your customers act at least partly as employees, and TMF clearly always embraced that concept, and took it up a notch with CAPS. So I made some picks and became an active participant on the beta test / suggestion board.
I decided right away that I was going to do something a bit different with CAPS. It pitched itself early on as a game of sorts, and that didn't interest me all that much. I was doing some (very little) writing at the time for TMF in and around biotech / healthcare. Basically, I was providing some coverage of industry news, and offering an opinion or two on the companies and that news based as much as possible on my industry perspective (I still do that, but on subscriber message boards as a home coverage Fool). I recall at the time appreciating the faith TMF showed in having me offer up that opinion, but while I was comfortable being opinionated, I was a tad insecure as to whether I really knew what I was talking about (and don't even get me started over concern related to writing ability .. blessings on all the Fool editors). Applying industry experience to investing and company analysis can make sense and be profitable, but I well knew that it was loaded with psychological traps and inherent biases as well. For example most scientists I know (and hang with) completely fail to appreciate business considerations.
With CAPS, I saw a tool where I could measure myself and get a sense of whether my impressions on the companies within my area of expertise as investments were correct. So I made this a biotech-only CAPS protfolio right from the start. Immediately I appreciated (always knew this really) that what to me is biotech is really healthcare to everyone else. Most investors consider only smallish drug developing companies as biotech investments. I consider that to be a rediculously narrow opinion, and one that focuses on the least attractive industry segment for investing. Give me picks, shovels, and established dividend payers any day.
My initial picks in June of 2006 JNJ, Abbott, GlaxoSmithKline, Dr. Reddy's, Barr (since acquired by Teva), Celera, Invitrogen, Medtronic, and GE (as a healthcare play). Only 2 are still active from that original selection set, JNJ and Medtronic (which reminds me, I should re-up ABT .. done). I was only 50:50 with the closed pick (1 was closed green, but under +5). I was smart close a few, and others I should have let run for a time longer or at least revisited.
I did well with CAPS early, getting as high as #19 I think (less than 2000 players at the time), but then shot down to sub-20 beanie wearing status. It was a climb since that time, and one that really refined my ability to invest within that industry arena that I know and follow.
CAPS is a very good information and opinion gathering tool. It is a better tool, in my opinion, for testing and measuring oneself (over time), and building confidence in what and how one invests. Features like blogs, pitches, reply's and such are tremendously useful notebooking features for recording and adjusting ones opinion (I don't use them enough).
I'm not as active with CAPS as I once was (I again have other outlets for pontificating), but I would be better served as an individual investor if I was again. It has helped me gain that confidence and refine that ability that suspected I had, at least within this narrow realm. Now I just need to watch out for overconfidence.
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