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alstry (34.93)

Congrats to DWOT

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October 28, 2008 – Comments (7)

If you look at her score.....she has destroyed the market because she is net short.  In order for her to beat the market she must not only be right on the direction...but she must outrun a  falling knife.  In an environment where the market  has crashed over 40%....that is quite an accomplishment indeed.

A real life short that would provide a 50% return only shows beating the market by 10% in CAPs.  If DWOT made that bet actuality...her personal returns would be much better than her CAPs score would represent.  Conversely, if she green thumbed a stock that only went down 20% versus the markets 40%, she would lose 20% in real life but CAPs would show a 20 positive points.

This is not a knock on CAPs....it is the way the game is played and more  reflective of how institutional portfolios are managed.....I don't get it but that is life.  Many institional managers think it is less risky lose money by beating the market's losses than making money going all cash by  and not participating the market.

Remember, in the last century, if you participated from the beginniung to the first half (1950)....your returns would have been practically nothing.  I am working on a theory that we might even have a worse this first half century this go around....but the second half is going to provide fantastic returns.  The only problem is figure out what we are going to do for the next 48 years.

In real life, DWOTs returns have been far higher than her points reflect.....my guess is that she is that way in her personal life as well based on the quality of her posts and ability to sift wheat from stalks.  Don't whine about how CAPs scores, understand the rules and use it to your advantage.

Hint:  when a quality company has been really hit hard...that is a  good  time to green thumb at least for the short term because  it is likely to out perform the market.

7 Comments – Post Your Own

#1) On October 28, 2008 at 9:40 AM, abitare (31.21) wrote:

It is a "knock on CAPS" plenty of ALLSTARS, would be down significantly, if you invested in their "OUTPERFORMs" Are you really Outperforming if the market is down 40% and you are ONLY down 30%. What about cash? That is why I created an account on updown.com abitarecatania

YTD 160% is a little better then a broke Allstar.

 

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#2) On October 28, 2008 at 9:58 AM, alstry (34.93) wrote:

Ares....you are right...but that is the rules and we must simply play within them in this forum.  Maybe CAPs will one day set up a game where absolute returns are set against absolute returns....then both our scores would be much higher.

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#3) On October 28, 2008 at 2:12 PM, schlottman (< 20) wrote:

To add to the above, the game is much easier to make picks in a down market than it is in an up market.  Knowing the general direction of the market as down one can reliably earn the most points by using ultrashort funds than by picking individual stocks.  Ultrashort's move in the opposite direction of the index for 2x the gain versus a red thumbed stock only gets you the net of the difference between the downward trajectories.

When the market eventually reverses it will be far more of a challenge to gain points as you will need to pick winners of individual stocks as they will move up faster than the indexes.

For what it is worth, I think playing with fantasy dollars would be far more interesting.

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#4) On October 28, 2008 at 2:20 PM, alstry (34.93) wrote:

Schlottgoofball,

Then use ultra short funds in the same way silly goose.

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#5) On October 29, 2008 at 8:49 AM, schlottman (< 20) wrote:

"Then use ultra short funds in the same way silly goose."

An ultrashort ETF is not going to help your score when the market reverses to an upward direction?

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#6) On October 29, 2008 at 9:14 AM, alstry (34.93) wrote:

It will if you red thumb it.......for some guy who is as smart as I know you are in real life......it is amazing how silly you can be as a blogger or caps player.....give me a call so we can go out for drinks and I can really slap you silly.

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#7) On October 29, 2008 at 3:01 PM, schlottman (< 20) wrote:

So much for the anonymous nature of my alter ego stock picker.  I was thinking I'd now have to go into deep hiding for that mistake, but then again, drinks will always lure me out.

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