I'm writing this blog in response to fransgeraedts' blog posts about improving CAPS. Recent posts from the CAPS community generally have identified some compelling ways (some old, some new) to make CAPS a more valuable service for all of us. I want to touch on what I think are some of the more compelling ideas in this blog, with the hopes of getting some community feedback so that we can prioritize which enhancments to focus on first.
1. Increasing the pool of stocks available for picking. As most of you know, today stocks must meet our 1.50 share price and 100M market cap threshold to be elegible for rating. Generally, I think this is a good threshold since we want to avoid some of the pumping and dumping associated with penny stocks, as well as some of the volatility with illiquid stocks that could skew CAPS stock picking away from finding compelling real world opportunities for all of us. That said, there's nothing magical about our 1.50 share and 100M market cap thresholds.
I've tested a few concepts and here's the impact of different rule changes:
Drop 1.50 share price / 100M market cap and replace with 100k ave trading volume
*599 currently unratable stocks would be ratable, 585 currently ratable stocks would be unratable.
Net change to the ratable universe = +14
5k volume threshold & 100MM market cap remains in place
* 59 currently unratable stocks would be ratable, 866 currently ratable stocks would be unratable.
Net change to the ratable universe = -807
75k minimum daily trade volume only
* 715 newly ratable stocks and 541 newly unratable stocks
net change of +174
50k minimum daily trade volume only
* 875 newly ratable stocks and 498 newly unratable stocks
Net change of +377
A ticker is ratable if it has (100K avg trading $$ volume) OR (5K avg trading $$ volume AND 100MM market cap
* 603 newly ratable stocks and 515 newly unratable stocks
Net change: +88
I'm not blown away by the impact of any of these changes at this 2000 foot view of the impact. Still, it seems logical that dropping the share price and focusing on either trading volume solely or the combo of trading volume and market cap could be an improvement. Let me know what you think:
2. Adding New Rankings: As many of you know, we created some new ways of ranking CAPS members, that can be found on the Top Tens pages. You'll find lists that rank the best Outperform performance, Underperform Performance, as well as several lists that measure performance on absolute returns (i.e. removing the relative performance to our S&P benchmark). We need to do more to promote these new ranking measurements, perhaps profiling the top performers on the CAPS Members page.
I'd also like to start tracking top performers by calendar year. Who is the best performaing CAPS member in 2009???!!!
In his blog, Frans proposes that we consider new rankings based on what he calls Stock Picking, Macro, and Specialist categories. I agree with Frans on all 3 of these opportunities, and also agree with him that a new Stock Picking ranking could be a real value add. I'm going to re-name this the "Top Picks" ranking. Here's what I propose:
* We make use of the Top Picks feature on all CAPS member scorecards to create a separate CAPS Member Rating on just your Top Picks.
* We restrict you to having no more than 25 Top Picks at any given time.
* You must have 7 Top Picks in order to receive a Top Picks rating.
The above is pretty consistent with Frans' proposals, here are some other proposals that Frans makes that I am on the fence about but would love additional input:
* Require a 6 month holding period for top picks.
* Restrict top picks to stocks -- no ETFs or closed end funds.
* Restrict top picks to outperforms.
I appreciate any feedback I can get, as I would like to address one or both of these areas in the next 6 months.
In the short term, I can prevew for you that we will have *major* upgrade to our stock screener rolling out in the next few weeks. And we are working on a top secret project we call WALL-E, that is kind of a cross between the Segway and Android. :) It is defintely something that will be of interest to anyone who wants to get more investing insights out of the CAPS and The Fool--and I hope you'll seen it in October. WALL-E's coming. Prepare!
Have a great weekend Fools!