Use access key #2 to skip to page content.

Does Total Caps Membership Mirror Market Sentiment Pt II

Recs

0

May 08, 2009 – Comments (26)

I just posted much of this over on the latest 

goldminingXpert

excellent blog series 

 


The Market Is About To Plunge (Day 9, Vol.8)

and thought I'd put it my own blog for comment: I'm still hoping a TMF staffer or big wig will comment on whether they have ever tried to track or correlate.

I have to point out that pursuant to a somewhat tongue in cheek post I put up 3/12 MF membership is continuing to increase. My post at that time proposed that perhaps the market was going to run up based on renewed investing interest from the "little guy" joining MF. Could be hokum of course but there are dumber indicators out there with loads of market credibility. The question is if there is any correlation and if so then at what point does increased membership become a contrarian indicator? 

Also, I have to say that something I haven't seen anyone discuss anywhere is the pressure on institutional investors to not miss out on the run up. Imagine the heat from clients if they not only lost 40+% last year for their investors & clients but failed to make up ground at one of the quickest sharpest rallies ever? This may go on for some time yet. As a relative newbie, I keep having to reminding myself that the market is, at it's core, irrational. You can analyze the numbers all day and be 100% right in the strength of the fundamentals and the overall econmy & market and still be dead wrong on what that means for the broader sentiment or sector or an individual company.  I understand wanting to be "safe". I myself am over 60% cash right now but I continue to take profits and reinvest anyways always keeping a fair amount on the sidelines. I'm getting better at non option hedges. I do fully expect a correction, too but then I've been missing out on full particpation for 4-5 weeks now. Bemoaning "the stupidity" of it is a waste of time, IMO. What's stupid is to not be positioned to take advantage to some degree either way.

The market is going to do what the market is going to do no matter how right an investor may been in the past. I think there a quite a few fairly safe strategies for bull plays with bear hedges right now. Or vice versa if tha is your prefernece and personal sentiment.

Also I don't agree with the opinion that the market is mainly driven by bailout money. That's quite a stretch and I think misses the impact of the mutual & hedge funds plus the small investor. All anxious to recapture last years losses. Further, more money is still sidelined than in, from my understanding.  

In fact I have to say I have even begun to think that if there is any truth to the credibilty of "the street" as a contrarian indicator (I don't) I'm beginning to think there might be one for Caps players. When more and more lesss killed, low scoring players are almost comically certain in their prognostication as they leap on the "Iminent Crash" bandwagon you have to consider the possibility that it might not be a "reality" indicator but in fact an excellent contrarian indicator. No offense to anyone in partiicular here. It's rampant thru Caps.

If anyone is interested here was the original, short post

Does Total Caps Membership Mirror Market Sentiment? 

Good luck

Alex 

 

 

26 Comments – Post Your Own

#1) On May 08, 2009 at 3:04 PM, portefeuille (98.39) wrote:

There are contra-indicators all over the "caps" game.

My favourite is the amount of "why does not y follow from x" and "the market is going to plunge" posts.

 

Report this comment
#2) On May 08, 2009 at 3:07 PM, portefeuille (98.39) wrote:

(I do not means the exact "the market is going to plunge" posts, but all that are written in that spirit)

Report this comment
#3) On May 08, 2009 at 3:07 PM, portefeuille (98.39) wrote:

mean

Report this comment
#4) On May 08, 2009 at 3:10 PM, goldminingXpert (28.77) wrote:

My favourite is the amount of "why does not y follow from x" and "the market is going to plunge" posts.

I'm going to enjoy watching your ranking plummet. That's all I have to say. Taking the opinion of the a top fool and long-time top 10 member as a "contrary indicator" is foolish. More foolish yet is your statement of the "amount" of them. There's one a day, no more, no less. It's hard to use a static piece of data as an indicator. However, I suspect more and more as you keep posting that you merely managed to catch the bottom and are using that lucky event to get a big head and start spouting off random CNBC-inspired gibberish. You'd look a lot smarter if you had some sort of idea what a contrary indicator truly was.

---

Not a bad post Alex. There are smart ways to play everything. I, for instance, have been scaling into my short positions as the market has kept rising past my initial short. This is, in effect, reverse dollar cost averaging. The higher the market goes, the more money I make when it tanks. Just because the market is irrational doesn't mean we can't make money off it.

Report this comment
#5) On May 08, 2009 at 3:12 PM, goldminingXpert (28.77) wrote:

Ah, comments 2 and 3 clarify things a bit. I still think you have no idea what you're talking about. We'll see how your ranking fares when the next leg down of the bear comes.

Report this comment
#6) On May 08, 2009 at 3:17 PM, portefeuille (98.39) wrote:

... I suspect more and more as you keep posting that you merely managed to catch the bottom and are using that lucky event to get a big head and start spouting off random CNBC-inspired gibberish. You'd look a lot smarter if you had some sort of idea what a contrary indicator truly was.

What did I write that makes you think so?

 

Report this comment
#7) On May 08, 2009 at 3:24 PM, portefeuille (98.39) wrote:

a top fool and long-time top 10 member

slightly amusing!

We'll see how your ranking fares when the next leg down of the bear comes.

You might have a look at the score point graph between January 6 and March 6 and take it as an indication of that future performance ...

Report this comment
#8) On May 08, 2009 at 3:25 PM, goldminingXpert (28.77) wrote:

It's the whole tone and language of everything you write. I get the same sense of emotions and same sort of advice that I get watching CNBC. I've quit watching CNBC but there is no mute button for posters. Whenever you comment on anything I write, I get an unshakable urge to punch Dennis Kneale in the face.

Report this comment
#9) On May 08, 2009 at 3:31 PM, portefeuille (98.39) wrote:

Actually I have hardly ever written specifically in response to any of your writings ...

Report this comment
#10) On May 08, 2009 at 3:37 PM, portefeuille (98.39) wrote:

and same sort of advice

In stark contrast to your writings I refrain from giving advice or opinions, something that should not be too hard to notice.

Report this comment
#11) On May 08, 2009 at 3:40 PM, bigpeach (31.34) wrote:

goldminingXpert, you need to chill out. You take any disagreement with your hypotheses personally and respond with nasty, degrading comments. CAPS is a game, and nobody really thinks of it as anything more. Every time you call somebody stupid, you undermine your credibility and put on display your insecurity. Relax. It's okay to be wrong, nobody will think less of you for it. People do however think less of you for your obnoxious attitude of late.

Report this comment
#12) On May 08, 2009 at 4:02 PM, russiangambit (28.78) wrote:

I personally think portfeuille doesn't write enough other than some cryptic comments one can read either way.

Portfeuille, why don't you post something about your investment strategy? I am , for one, curious.

I also noticed that non-US based traders are more positive on the US propsects than the US ones. Do they see something we don't, or is it the other way around, - we see something they don't? I think, it is the second, though. You have to be in the US to experience the full brunt of CNN, CNBC and Fox combined. CNN in Europe is different.

Report this comment
#13) On May 08, 2009 at 4:29 PM, portefeuille (98.39) wrote:

Well, we have the same internet, I suppose (I am sorry to hear you find my comments cryptic. I do not have an "investment strategy", rarely watch television and most importantly: don't listen to the radio).

Report this comment
#14) On May 08, 2009 at 4:51 PM, camistocks (54.52) wrote:

The crowd is bearish... 

Report this comment
#15) On May 08, 2009 at 4:52 PM, russiangambit (28.78) wrote:

> Well, we have the same internet, I suppose (I am sorry to hear you find my comments cryptic.

Usually, I am not sure when you are jocking and when you are serious. I tend to decide in favor  of jocking, judging by some of my german friends.

> I do not have an "investment strategy", rarely watch television and most importantly: don't listen to the radio).

How do you come up with your ideas, then? Through direct access to the universal knowledge?  

 

Report this comment
#16) On May 08, 2009 at 5:08 PM, portefeuille (98.39) wrote:

... that is part of it (do tend to decide in favor  of jocking!)

"... I hear voices in my head,” he says when I ask how he picks his investments

(see comments #7,8 here)

Report this comment
#17) On May 08, 2009 at 5:29 PM, goldminingXpert (28.77) wrote:

Through direct access to the universal knowledge?

Please give me a connection to it. My life would be so much easier. Thanks.

-GMX

Report this comment
#18) On May 08, 2009 at 5:37 PM, portefeuille (98.39) wrote:

“The market has infinite wisdom; it is divine.” (same source)

Report this comment
#19) On May 08, 2009 at 6:20 PM, Alex1963 (27.93) wrote:

goldminingXpert 

Thanks. Much appreciated! I don't know if you & Port have a running discussion going but for me I was certainly now singling you out as the sole "market plunge" prognosticator. There are many and most don't have much credibility at least in my book. You do. Which is why I'm still waiting for you to shred my China argument from your blog a few days ago hint hint :) I know you're busy. Not a problem. Plus I double pasted some parts and just sort of mangled your blog. Maybe that didn't help either?

portefeuille

Always good to have you stop by-thanks 

russiangambit

 I agree with you. I think non US investors actually have a better big picture view. For instance the Economist usually has a less narrow focus than the home grown sources. Certainly less shrill & with no wild bull or bear raving, thank god. Personally I think many foreigner investors are not quite ready to count the US out. Whether they may be missing the facts or not they are still helping to drive our recovery/rally. They certainly have helped the US$ in the Forex market-damn! That also went on far longer than I thought it would. Because we still offer an attractive divirsification alternative. We are still relatively transparent compared to many markets etc. You know maybe an investor puts the largest % in their home country + Brazil + Asia + US. Spread around to the areas with solid track records plus sovereign investments in the market they likely know best. I wish I knew if there were a site that posted foreign vs local investment in, say T-bills or TIPS.  Now that would be useful gause to watch.

I think these days not to many folks are confident in any one country or region leading the pack so they are spreading it around. I know I am. Of course I could just be projecting my own bias on the market! Anyway thank you for your comment. 

Alex 

But no one is commenting on my correlation theory!? Is it so lame? Well that's OK. I'll keep watching it and all the other gauges I factor in, including my horoscope sometimes LOL....  

 

Report this comment
#20) On May 08, 2009 at 6:33 PM, portefeuille (98.39) wrote:

But no one is commenting on my correlation theory!?

It is a nice theory, but as you noted earlier they (the staff) should have a look at it and confirm or reject it.

Report this comment
#21) On May 08, 2009 at 6:34 PM, goldminingXpert (28.77) wrote:

Which is why I'm still waiting for you to shred my China argument from your blog a few days ago hint hint :)

Please repost here. Next week is finals week for me so I've not been able to keep up with all the comments (one of the few downsides of a post-a-day blog series), but I liked your post so I'd be happy to give another take of yours some attention.

Report this comment
#22) On May 09, 2009 at 11:49 PM, rickdoom (85.30) wrote:

Alex,

Your correlation theory is interesting, however, I think there are too many variables involved that could potentially skew the data one way or another, making it difficult (if not impossible) to obtain truly unbiased results.

For instance, how would one go about distinguishing "real" new members as opposed to just new CAPS portfolios created by existing members?

Consider the hypothetical case of players who has been short this market for the past 2 months, and whose CAPS scores have subsequently plummeted into the negative 1,000's (or worse).  In most cases, such a player stands very little chance of getting back to even, let alone getting ahead.  Hence, the most prudent course of action for such a player would be to simply abandon the failed portfolio, wipe the slate clean and start a fresh one.

I would surmise that a fairly high percentage of the "new" membership can be attributed to the afforementioned scenario, especially during times when the market has made an extreme move in one direction as it has now.

Report this comment
#23) On May 10, 2009 at 1:43 PM, Alex1963 (27.93) wrote:

rickdoom

Good point. Of course that could have been happening in '08 as people anticipating the drop/bubble got out too early, red thumbed etc. I think the data would be like any other indcator-difficult to say "why" and maybe not critical to know. Just a smll piece of a far larger puzzle we all try to see the picture for. 

Report this comment
#24) On May 10, 2009 at 2:53 PM, Alex1963 (27.93) wrote:

 goldminingXpert

Ah after looking all over for your original blog I see now it was posted 3/18. I didn't ralize it was so "old" when I posted to it. No wonder you didn't reply! Here's the link

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=165721&t=01008631960540474609 

I'll put it back on my "following" tab and take the answer thereor here whichever is easier, if you have time of course. Good luck with finals

Alex 

Report this comment
#25) On May 10, 2009 at 11:51 PM, portefeuille (98.39) wrote:

another quick sentiment measure

Report this comment
#26) On May 12, 2009 at 6:20 PM, Alex1963 (27.93) wrote:

 portefeuille

Hah! I checked out your link-funny but also disturbing. If there was any question bigotry is alive and well this page link adds some anecdotal evidence anyway.

Thanks for sharing

Alex 

Report this comment

Featured Broker Partners


Advertisement