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CAPS should let us dollar cost average, bid on penny stocks

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January 25, 2009 – Comments (3) | RELATED TICKERS: MTW , XL , CHK

As a suggestion to CAPS, I would offer that players in the caps rating game would get a more realistic experience if we could dollar cost average. 

For example I took a bit of a vacation over Christmas, came back with some stock picks and started buying with real money.  Only to watch the market tank over the first copule weeks of this year.  And that hurt, but it also gives me a chance to buy more cheaper.  For example, my first purchase of ASH was at $11.something, but I added to it substantially in the 9's and have a cost average of less than $10.   I've purcahsed MTW anywhere from the low $6s to the mid $8s.  I like the shares at all those prices, but the recent slump has really paid off for me by allowing me to lower my average cost.  I've gotten XL anywhere from the very low 4s to the high 2s.  CHK from 19s to 13s.  etc. ec. etc.

Whoever does the best from oct 08 to oct 09 will be whoever made the highest percentage of his/her picks on nov 20, 2008.  And thats fine, but we would get better and more realistic practice if we got $10,000 imaginary dollars to use and trade how we wanted.  Charge us $2 per buy or sell for even better realism. 

And lastly, why can't we buy penny stocks and microcaps?  Statistics (which I read, BTW, in MF articles) show that small and microcaps return much, much better than big caps coming out of bear markets.  And i'm all about playing the statistics, and a large chunk of my portfolio is/will be in stocks that don't meet the $1/$150M market cap rules. 

 Also, not allowing those stocks to be rated prevents users of CAPS from benefitting from the opinions of their peers when shopping for microcaps, which is unfortunate as the CAPS rating is something I take into consideration for every company.

3 Comments – Post Your Own

#1) On January 25, 2009 at 1:13 AM, SharpSEO (68.82) wrote:

Yeah, I've thought the same. But it would be hard to do logistically. Maybe a one-time "double-down" option on active pics? It would use the average price of your two picks, but count as two separate stocks.

To really make it work, though, you'd need a portfolio-simulation type of setup: Here's 100k in fake money, spend it however you want. That's a lot harder.

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#2) On January 25, 2009 at 9:59 AM, chk999 (99.97) wrote:

Investopedia.com has a portfolio management game that is pretty good. I use it to try out option strategies and the like. CAPS is a stock picking game which is why it scores the way it does. The reason it doesn't allow penny stocks is that they are too liable to manipulation.

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#3) On February 06, 2009 at 11:34 AM, checklist34 (99.72) wrote:

Hey thanks for the feedback.  Whatever the situation with CAPS, the ability to dollar cost average in the real world has certainly benefitted me as I've rarely bought a stock for the first time at its bottom.  As a value minded guy I seem to take an interest in stocks before the prices bottom.  But, then I get a chance later to buy even cheaper which makes me :)

 

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