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CAPS Strategies - 99+ the lazy man's way



December 16, 2008 – Comments (1)

Somehow, I've ended up at 99+ percent in CAPS.  I am neither a brilliant analyst nor a thorough researcher, but I thought I would list the strategies I am currently using as they seem to be working for the moment.

Underperform on bonds - Over long and often short periods of time, bonds of nearly any duration and quality underperform equities. 

Underperform based on score leader picks - I just look at what the score leaders have and steal some of their ideas, particularly recent ones and ones that are +/- 10 points.

Close and reopen underperforms - When one of my underperform picks gets in the green by more than 4 points or so, I close it an re-open to maximize points and accuracy until it gets close to the $1.50/$100M mkt cap limit, at which point I let it ride.

Outperform on top MF picks - I currently subscribe to PRO, HG, IV, MDP and go outperform on the top Best Buys Now or Buy First picks from these services.

Outperform on Magic Formula, 4-5* CAPS - I check every so often, then look at the top 25 100M+ mkt cap picks in CAPS, and go green on the 4 and 5 star picks.

Let Outperforms run - I err on the side of letting my greens run in order to take advantage of compounding to maximize points.

Don't close losers - For thumbs up and down, I don't close losers.  This is not based on research, analysis or even my current opinion, it is based on how the game works, where your ranking depends in part on accuracy.  Patience is a strategy of hoping to be right eventually.  I've had picks more than 100 points down that have come all the way back positive.

That's how I am playing CAPS.  It suits me b/c all of the strategies are relatively simple and easy to follow.  I don't do much shorting in real life, but the outperform strategies above are also the core of my strategies for investing my own money.      


1 Comments – Post Your Own

#1) On December 16, 2008 at 4:41 PM, DemonDoug (31.22) wrote:

I've had picks more than 100 points down that have come all the way back positive.

This might be the most important of all factors - to have that ride it out mentality, especially when you know you are right.  The recent example of DRYS, where some players were down almost 1000 caps points on that stock alone, and it came all the way down, is a great example of that.

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