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Diary of a juicer



October 17, 2007 – Comments (2)

It's confession time, boys and girls. I'm new here, but it didn't take long for my ultra-competitive (and somewhat sinister) side to figure out how to game the system. I'm a very sincere person, though, so I'm willing to tell everyone that I am using a technique that I'm almost certain the makers of CAPS didn't have in mind when they set up the ratings system. It's like juicing. Here's how it works:

First, put an underperform rating on stocks that look headed for severe losses (as I'm sure you would anyway). Particularly stocks where the southeastward trend is most likely to be uninterrupted and the potential for recovery is most speculative - i.e. subprime lenders. Next, when you have 5+ points on your pick (enough to get credit towards your accuracy rating), end your pick. Finally, repeat the above process to the greatest possible extent. Your accuracy rating gets a huge boost, and as long as you do this with only underperform ratings on stocks headed for zero, your potential gain is essentially unchanged (99.2 vs 99.6 or whatever).

Right now, I am on my second red thumb pick for a large number of homebuilders and VG, and I plan to do the same with subprime lenders. I will continue this shameful practice until I cannot, or my accuracy rating exceeds 80%, whichever comes first.

Is that like a baseball player taking steroids? No, because my body is not at risk and there's no real money at stake. Does it dishonor the spirit of CAPS? It very well might. I am waiting for Dave G or another CAPS elder to say something about it. Until then, keep juicing your accuracy.

P.S. You can do the same with outperform picks, but I haven't for some reason. I don't know why not.

2 Comments – Post Your Own

#1) On October 17, 2007 at 12:38 PM, hondo928 (97.39) wrote:

This works well for underperform because it's like getting a 5% return everytime Underperform picks have a diminishing rate of return, thus the stock needs to fall more the longer you have hold it down no get any points.  Outperform picks work the opposite they grow exponentially say you get in at $5 a share and it goes to $50 well you scored 1000 Points the 10 bagger on the other hand say you get in at 10 you only scored 500, now that 50 goes to 100--2000 points vs, 1000 the spread increases the higher it goes.  Thus your point changes will have more beta for lack of a better word.  It will hurt your average to do this on an outperform--more than on an underperform.  It's not calculated into your score at all, which I think would be nice like say 10% of your rating, but it's on average how well your picks beat the market so for a matter of pride, "juicing" hurts your average pick score.

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#2) On October 17, 2007 at 6:54 PM, FleaBagger (27.54) wrote:

Thanks. I think I intuited that this works better on underperforming without consciously realizing how.

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