Caps as an investment community.....
August 17, 2011
– Comments (60) |
RELATED TICKERS: JBII
, ZAGG
I've learned a lot from my participation on CAPS. Some days it can be a little tiring to sort through all the blogs and pitch comments that have more negativity than advice. Some days, it's hard to find investment advice in some of the material.
No, at this point, I'm not going anywhere, but I'm feeling a bit melancholy. My style has varied over three years as have the markets and there is something new to learn each day from my own analysis/reflection and reviewing what others have to teach, (sometimes unintentionally).
I do lament that the community is slowing down in the variety of "community sharing". Pitches, blogs and other information seem to be waning. The community use to add new members faster than they left. Currently there are 65,594 accounts with no picks in the last 90 days, (yes I know some of these are just folks who don't make picks as often, but as a rough number..). There are 73,991 accounts. 88.7% are mostly inactive. When I joined we were adding accounts by the thousands. There are 1,154 accounts that are considered new the last 90 days. MANY of these are people who have had accounts for years, but tweaked their accounts in a way they were flagged new.
I can think of a dozen people who welcomed everyone. Mary 953 wrote some nice primers. There are some great new bloggers and contributors of late. IF I name names I'll miss some, but overall we seem to be missing something. I really thought at the rate CAPS was growing that it would be hundreds of thousands of members by now. The articles and tools used to introduce CAPS to new people are also struggling to maintain consistancy and quality. There is not a day that goes by where someone linking in from an article posting on a newsfeed doesn't comment that CAPs is sending mixed messages. More writers, more services, more differing of opinion, but the new person can't discern the influx of mixed opinions from CAPS players being used in articles, Staff writers and news services. It's also hard for them to understand how CAPS started as a forum for independent investor thinking and now has Options trading and a mutual fund!
So while I reflect....THERE ARE MANY good contributors on CAPS, but maybe I'm just tired and the markets have disrupted patience and dialogue. Maybe my memory from a few years ago is tainted, but if you're a contributor today, DON'T let my reflections distract you!!!
I'm finding it harder to get into a financial discussion with someone without it becoming personal. There is nothing new about people having confirmation bias. I've had a few bad cases of it myself. There are also "pumpers" on some more obscure equities that only start an account to spam all the blogs and pitches contrary to their view. I try to find those willing to learn and make suggestions, but it can be difficult sometimes discerning the pumpers from those that are just overly biased.
A good example is this thread from one of my closed pitches on JBII.PK. It was one of many that tykundegex posted on with no financial metrics, but a strong bias for JBII. His first posts came with no picks and an account, he added some, and stuck it out after initially being called a shill for showing up "everywhere" at JBII's peak.
Another round of conviction bias shows on a pitch that masokotanga posted on ZAGG. AndreCCCP and I seem to have taken it over. (Sorry masokotanga).
Sometimes I wonder why I try so hard, some people don't really want to learn, but some do. There are many ways to value a company, Valuation, Technicals, Fundamentals Some people are satisified putting their hard earned money behind a concept that they "just believe in". If they want to add more layers of DD then welcome.
From a valuation standpoint, it's been recommended by others before, I recommend "Warren Buffett and the Interpretation of Financial Statements" by Mary Buffett and David Clark. It's a brief read and a good start.
One reason I try so hard is because I've been victim of confirmation bias myself on very similar company's to the two mentioned above. I fell hard for Razor Technologies three years ago. I discounted the motors for electic cars to zero and focused on the geothermal progress. They built up the first system, sold the power and then went bankrupt. I fell for Senator Orin Hatch cutting the ribbon, stating that "God would Bless It" and the jobs it offered. The ringing of the bell on the stock exchange. The alternative energy craze. I penpal'd with others who visited the site. Fortunately, I woke up and got a lot of my investment back, but I still regret that I referred others to it. Most of Caps top players downthumbed it multiple times. Minus 120 points, I got out on CAPS around $.84, it's now at $0.02.
I'd like to think I've learned a lot from my mistakes, (yes, mistakes plural, I've got a bunch of them). I'd like to think that I contribute back to the community.
If we sometimes get "short" with people who set up new accounts and hit multiple pitches/blogs on the same equity with non-financially supported enthusiasm, then hopefully we can be forgiven. If you're here to learn, then try to expland your boundries. IF you have confirmation bias and don't seem open to any real dialogue to add then the conversation won't be too productive.
ONE of the biggest "mistakes" players seem to make when they see players making a downthumb call on an equity is that "we are short" and we are trying to drive the price down. Downthumbs mean that we don't think the equity will outperform the S&P. A downthumb an OB or PK equity might mean we think not only that it's overvalued, but that it might be a farce. A good percent of them are and by being a PK (except for foreign ADR listings), or an OB they don't have the reporting and Governance requirements of other boards so extra care should be taken.
If you see a downthumb on one of your favorite equities, just because it's RED it doesn't mean that turning into a blind charging bull will change an opinion.
Goodness..we can affect the price with our blog or pitch?? ;)
IN regard to JBII.PK and ZAGG. They both make good examples while ready Mary Buffett's book. One thing we've tried explaining about ZAGG is the increasing receivables, the lack of cash flow, (despite doubling sales), and the increase in inventory from 5,000 SKU's that will become obsolete. Addi in the debt at 7.25% interest from buying a company that adds little new variety to their product, (hint to Zagg, buying a iFrogz doesn't mean you can become a prince).
Now that I think about it, many of ZAGG's products are plastic. They should contract with JBII.PK for a plastic to oil processor unit and turn that excess/obsolete little pieces of plastic to oil....maybe then they'd both have some revenue.......
So, I'm not sure what my point was. If you've gotten this far then thanks for trying to follow along.
TSIF The Sky isn't falling today....unless you're a company with fictious books, (not saying that's the case with ZAGG, maybe JBII.PK and "media credits")....then lookout below when some of the Foolish CAPS players get a line on you!!! ;)
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