Dogpiling December: The GMX Retrospective Part 2
In Part 1 of the series, we covered the earliest days of the GoldminingXpert where he struggled to gain 500 points and was not yet an all-star.
In part 2, we start covering the more prosperous days of December 2007, where GMX learned to embrace the power of CAPS dogpiling. If you've read my blog for long, I've long talked about the effect of dogpiling on the CAPS community. In short, during this period, I learned to search out for stocks that were near universally hated by the CAPS community (particularly her all-stars) and then add my red thumb. Here are the results of some of the CAPS dogpiled stocks I joined in on:
Ticker: Start Price/Today Price
CFC 10.55/4.25 (I would pick this one to go down 7 times--and was correct 7 times. Great way to harvest accuracy.)
Key Lesson: If CAPS hates a 1-star concept stock, it goes down. None of the picks I shamelessly made following people like TMFBent failed. That doesn't mean you should blindly follow the game's all-stars into their picks--however, the clearest lesson is that you should NEVER EVER EVER buy a 1-star stock that has CAPS all-stars running to insult. If the stock has a top bear pitch of "LOL" or "Pwned!!!!!!!!!!" you should NEVER buy that stock!
During this period, I also discovered the healing power of ultrashorts on a CAPS' players accuracy. My mentality at this beginning of this game was to make as much accuracy as possible. Up until recently, my focus has never been on points--from the very beginning, my goal was 80% accuracy.
With that in mind, I realized that the ultrashorts were a beautiful tool. On December 3rd, I came to the conclusion that Santa wasn't coming. The bear market was just on the horizon and I was ready to cash in. Therefore, I put out green thumbs on SKF, SH, QID, MZZ, and DXD. I shorted the market via the ultrashorts at 1470 S&P and covered at 1445 the next week. While this wasn't a huge move, my ultrashorts moved up 4 or 5% while the S&P dropped 2%. Result: 6 or 7 points a pick x 5 = 35 points. Big whoop, eh? However, my accuracy on those picks would be 5/5. Ta-da, easy way to raise accuracy. In a bear market, you can be sure that ultralongs will always go down more than the S&P and ultrashorts will rise versus the falling S&P.
I have now picked SKF fourteen times over the past year. I've used 9 green thumbs and 5 red thumbs as occasionally it gets too overbought and moves back down. All 14 picks have been closed with positive points/13 with 5+ points locking in even more accuracy.
Two key points from here:
1) The market can be timed! There, I said it.
2) If you want to rise to #1, you have to be able to leverage the ultrashort/longs to your advantage. I've scored 221 points off my 15 (I have another active SKF pick currently +10 points) picks of SKF. Multiple this across many ultras and you have a huge well of points and accuracy. 14/14 accuracy and 221 points off of one ETF... and there are dozens of these to trade. A well-designed strategy of shorting tops and going long at bottoms will add a steady stream of points and accuracy to your more volatile single-stock portfolio.