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fransgeraedts (99.92)

Innovating caps (5); playertags and an ETF based ranking; harvesting information on macroeconomics and sector bets; i

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September 08, 2008 – Comments (0)

I have written two blogs on way's to accomodate the sector bets style better. I want to make one other suggestion along those lines and then i want to conclude with a suggestion how to best harvest the potential inormation the style generates.

It would be very usefull if participants would tag not only stocks and (as i suggested in my last post) blogs, but also themselves. And i do not mean bald-intellectual-with-slight-pouch type of tags (even though it would be fun). I would suggest creating tags that describe the strategy of a participant. If we then could make it possible to search participants by those tags (preferably in combination with their scores) that would help immensely to find the best within certain strategies.

As i have said before more then enough times, the use of caps, apart from the pleasure, and the personal learning curve it makes possible, is the information it produces. Caps is very good at harvesting that info around individual stocks. It is not yet as good in harvesting the info the sectorbets generate.

It would of course be ideal if it would generate a continous overview of the weighted opinion about every sector of all participants that make sector bets. Weighted just like the collective opinion about stocks: the opinion of people who are right more often has a bigger influence on the score. 

Imagine this: a quick look would tell you every morning on which sectors caps participants are the most poritive, which they are most negative on. A deeper look would you give you the opinion on al sectors and the direction of change. Would that not be a very usefull info to have?

Now i suppose we could produce scores like that by aggregating the scores of stocks within sectors. But i am afraid because many people are stockpickers without sectoropinions that aggregate info would not be very helpfull. It would also make it impossible to give an extra weight to the opinion of the best sector betters.

Therefore i think a different approach is needed.

In an earlier post i suggested to create a seperate competition and ranking with regard to stockpicking and buy-and-hold. To participate you would need to have at least ten green thumbed picks that you hold for a long time. You could use the dollar sign to designate them, within your portfolio. From the moment you have designated them you enter the competition/ranking. (for details look at my earlier "innovating" posts.)

Two things were important about that earlier suggestion. It would isolate the real good stockpickers. And it would be possible to play that strategy/competition/ranking within a larger portfolio -if you want to do so.

I have a similar suggestion about the sector bets.

I would suggest to create a competition/ranking based solely on picking etf's. At all times you should have between 10 and 25 etf's within your portfolio. (The maximum is to prevent a few possibilities of "gaming" the competition) You can both red and green thumb them.

Done in the right way this would give very usefull info. The best sectorbetters would be the one's on top of the ranking. Etf "scores" could be aggregated to sector scores. And that would produce the info described above. We could see which sectors are green, which are red and what the trends are.

Important is that just as with the stockpickers ranking you could choose to make a portfolio made up only of etf's  -or you could run it within a larger more eclectic one. 

 

a pleasure as always

Frans Geraedts 

 

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