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portefeuille (99.76)

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August 01, 2009 – Comments (14)

Has anyone developed an automated system that uses the "caps" calls? Even the obviously flawed star ranking system could (in the period that this paper studies) be used to "outperform" the benchmark by a nice margin (as is shown in the paper). All calls are public and it would really be a waste to not use them.

If you have and there is a way for you to describe it without giving too much away please respond here.

Somehow this "caps" game situation reminds me of the Goldcorp story. They should initiate a contest ...

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The Canadian gold mining group Goldcorp made 400 megabytes of geological survey data on its Red Lake, Ontario, property available to the public over the Internet. They offered a $575,000 prize to anyone who could analyze the data and suggest places where gold could be found. The company claims that the contest produced 110 targets, over 80% of which proved productive; yielding 8 million ounces of gold, worth more than $3 billion. The prize was won by a small consultancy in Perth, Western Australia, called Fractal Graphics.

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(from here)

14 Comments – Post Your Own

#1) On August 01, 2009 at 8:13 PM, anchak (99.86) wrote:

There are couple of people ( players) who do this in CAPS:

Check them out:

CAPS1StarIndex

CAPS5StarIndex

unanimousfives

unanimous1stars

 

CAPS5star1star

 

I really used to like CAPS because of these interesting players - well not they are not there - somehow they have all slowly retraced out of the limelight!

 

All the best

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#2) On August 01, 2009 at 8:23 PM, portefeuille (99.76) wrote:

Thank you, anchak. Those are all on this stupid star ranking. There must be better ones. I hope those on their private islands read this. Should I try (inverse) bottle mails?

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#3) On August 01, 2009 at 8:32 PM, portefeuille (99.76) wrote:

************************************************************************************

a guide to my blog posts can be found in the comment section to this post

(should be or should be close to the last comment)                                                                

************************************************************************************

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#4) On August 01, 2009 at 8:50 PM, portefeuille (99.76) wrote:

One thing an "intelligent" system should obviously care about is the question partially answered here. Who knows what?

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#5) On August 02, 2009 at 12:20 AM, portefeuille (99.76) wrote:

Some of the best "outperform" calls from my list of calls.

I did end some of those calls already but let's just look at the performance (not outperformance, dividends not included) between the date of the call and today.

ticker rel. change (%)

HGSI 2760.00
VVTV 1040.74
SEH 738.93
CENX 654.95
BGP 621.82
NVAX 567.69
FITB 550.68
GMK 510.65
DNDN 493.38
BLC 421.82
IFNNY.PK 411.39
BCS 397.34
ACAS 381.33
LVS 369.85
SOA 351.52
STEC 348.55
MIC 313.83
PSM.DE 283.59
ING 278.36
CSE 271.20
BAC 267.91
FEED 262.50
UIS 258.00
PMI 248.48
CRAY 242.62

there are some bad ones as well, hehe ...

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#6) On August 02, 2009 at 12:49 AM, portefeuille (99.76) wrote:

just in case anyone wonders. here are the names to go with the tickers.

ACAS American Capital Ltd.
BAC Bank of America Corporation
BCS Barclays PLC ADR
BGP Borders Group Inc.
BLC Belo Corp.
CENX Century Aluminum Co.
CRAY Cray Inc.
CSE CapitalSource Inc.
DNDN Dendreon Corp.
FEED AgFeed Industries Inc.
FITB Fifth Third Bancorp
GMK Gruma S.A.B. de CV ADS
HGSI Human Genome Sciences, Inc.
IFNNY.PK Infineon Technologies ADS
ING ING Groep NV ADS
LVS Las Vegas Sands Corp.
MIC Macquarie Infrastructure Co. LLC
NVAX Novavax Inc.
PMI PMI Group Inc.
PSM.DE ProSiebenSat.1 Media AG Vz.
SEH Spartech Corp.
SOA Solutia Inc.
STEC STEC Inc.
UIS Unisys Corp.
VVTV ValueVision Media Inc.

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#7) On August 02, 2009 at 1:19 AM, portefeuille (99.76) wrote:

to put this in perspective



enlarge

 

do we need to say more about this ridiculous $1.50 rule?

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#8) On August 02, 2009 at 1:49 AM, portefeuille (99.76) wrote:

By the way none of these was at the time I made the respective call among those obscure stocks that quite a few "caps" game players like to focus on ...

They could replace this absurd rule by a volume criterion which at least would make some sense. 

And if there are still people unconvinced that this rule is pure garbage just consider this mathematical theorem.

Let c be a real number > 0 (in "our case" the cutoff c = 1.5).

For every eps > 0 there is a natural number n such that  n*eps > c.

So all it needs to lift any stock price above the cutoff is a sufficiently large inverse split ratio.

Sorry for the overkill.

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#9) On August 02, 2009 at 1:50 AM, portefeuille (99.76) wrote:

The c > 0 part is obviously unnecessary. oh well ...

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#10) On August 02, 2009 at 9:44 AM, TMFJake (53.91) wrote:

Porte, have you taken a look at DCSTrade's Magic Formula / CAPS Indexes?  You can find them here.  I think this is an excellent example of using a typical fundamental screen and attempting to juice returns with CAPS ratings...

BTW, we very much had the GoldCorp story in mind when developing CAPS.  The way I read that story is that GoldCorp's rockstar team couldn't find a way to mine the Red Lake mine profitably--think Wall Street analysts.  So, they invited the rest of the world to help, and those with smarts and related domain expertise, the Australia group, were able to develop a much more powerful model for locating the rich seams... Diversity of Intelligence beats concentrated domain expertise.  

Another story that influenced us was the IBM Deep Blue experience, in which a team of computer programmers joined forces with the leading minds in chess to best World Champion Garry Kasparov.  Here my takeway is that Collective Intelligence beats the best individual.

So, to design our system, we were hoping to maximize the ability to aggregate individual judgement and create a system that encouraged diverse strategies, or input from diverse intelligenct actors...

Finally, to touch upon your other comments:  We have done some work measuring localized expertise and find that there is some good information there.  You lists of the top minds in Sectors is somethign that we provide in a limited way from any CAPS Tag page.l

And, yes, I think that we will move toward relaxing the $1.50/100M rule somewhat at some point based on a trading volume measurement....  You know, if you'd just send us pizza as you always threaten to do, we might get to some of this work more quickly.

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#11) On August 02, 2009 at 10:32 AM, portefeuille (99.76) wrote:

okay. sounds good.

one of my pizza comments

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Please show my arguments (especially the one given here (#27)) to any nerd at "motley fool" (the one behind the pile of empty pizza boxes - there must be at least one, have a look!) and have him explain it.

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(from comment #19 here)

In a pizza comment I can't find I said that the suggested changes (I don't remember which ones, a collection of easy to implement changes/additions can be found in this post) could be made on a week end for the price of a few pizze. 

I have the feeling that the guy I had in mind (the one behind the pile of empty pizza boxes) may be found in this picture

 

 

taken from this video

 

 

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#12) On August 02, 2009 at 10:37 AM, portefeuille (99.76) wrote:

also don't miss this video

 

 

featuring this picture

 

 

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#13) On August 02, 2009 at 11:02 AM, portefeuille (99.76) wrote:

Inspired by my favourite camistocks quote I have this piece of advice.

Don't let the "bears" separate you from your money (by convincing you that everything is so overvalued for example).

 

 

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#14) On August 02, 2009 at 11:09 AM, portefeuille (99.76) wrote:

(except for SPY or QQQQ put options of course. they are always so undervalued and will triple within a few days, hehe ...)

 

((not talking of you checklist34 (see comments #5-7 here). it is okay to make "tons of money" and then gamble a little, hehe ...))

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