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fransgeraedts (99.71)

Innovating Caps; a reflection in answer to a post of hall9999



October 19, 2007 – Comments (3)

I wrote this in answer to a blogpost of hall9999 where he suggests to limit the amount of stocks people can pick, among other things because of the problems new players have in "catching up".(


dear hall,

i am still just a beginner. But i have -like you- been thinking about caps and its peculiarities.

A few thoughts.

I think we should not alter the rules to quickly. Let see how this plays out for a while longer. People adapt, invent, circumvent. Observing and participating in that will be worthwhile. For example: new strategies are coming to the forefront. You could call them sector picking instead of stock picking. Among other things they are an answer to the question you raise above: how to amass points without taking on absurd (and therefore self defeating) risks. TMF wants to raise us as buy-and-hold-stock-picking children... . Some of us are exactly that. But others grow up into something completely different. I think that is interesting, exciting, and for caps as an investment tool very very good.

In general i think we should alter caps not by taking something away but by adding features. If possible in a way that adds complexity and opens up possibilities instead of limiting them.

One of the things i learned (again) from Caps is how important praise is. Especially if deserved. The lucky charms do that very effectively. I think one of the solutions to the problem of "catching up" already exists -but could be used more extensively and better.  Most charms i can aim for irrespective of whether i am new. In effect some of them are more easily achieved when being new. (hottest week, month, 100 over 100) That mitigates partially the depressing look upwards at those 1000's of points. (How could it be used better? make more charms that are directly related to new players. Also, and i think very important in general, you should never lose a charm once you gain it. Being for example hottest player of the month is very difficult to achieve. If you have done it, that should stay visible. An easy solution would be to change the coloration of a charm when its no longer true ..but was.)

A second solution that already exists, is the new player category in itself. Within that category i am competing against people that are more or less in the same situation as i am. Therefore i can, in the beginning, measure myself against them instead of against all of caps. It is possible i think to make that existing feature more visible and prominent. For example by giving not one percentile (what is my position within all of caps) but giving two (what is my position within the new players.)

Over time however the existence of the new player category will not suffice. When caps is 10 years old the gap between beginners and the successful among the old hands could be insurmountable indeed. (Think of it as trying to catch Warren Buffet in dollar terms) The solution should be i think along the lines of the new player category. People should be constantly compared both to the general community (including the WB's) ánd to people in their "age" group. We could for example compare everybody to the group of people that entered in the six months surrounding their own entry date.

Your suggestion of limiting the amount of stocks people can choose intrigues me. I do not think it would solve the new player problem. In 10 years time there will be WB's among the limited stock pickers as well. But i nevertheless think that done in a certain way, your suggestion could give caps another dimension, would be a welcome addition.

I would like to see it introduced among lines like this. There should not be a change in the general limit. Those 200 stocks are fine and they give room to a plethora of strategies .. which is as it should be. However within that and as an extra possibilty people should be able to create like a sub list of stocks that is rated separately. They should be able to do that simply by marking a stock already in their portfolio. (It would give meaning to the dollar sign!) The rules for that sub list are debatable but in keeping with the TMF tradition and aims it could be something like this:  You enter the rating only after you have marked a minimum of 20 stocks. You may enter no more then 30. All of the stocks should be outperform. You have to hold a stock for at least a month. If the number of marked stocks drops below 20 you drop out of the rating. (From this point there are two choices .. either your points score is frozen and if you enter again by marking more then 20 stocks you begin from zero...or ... if you enter again you unfreeze your score and add to the existing points)

Thinking about Caps is just as important i believe as thinking about our stock selections. This is a game, an information mine and an important experiment in collective intelligence. And it is fun,


fool on,




3 Comments – Post Your Own

#1) On October 19, 2007 at 2:33 PM, TMFSpiffyPop (99.79) wrote:


These are some very good thoughts, and run very close to many of our own. The chances of us reducing the input of community intelligence in CAPS are, I believe, nil. The likelihood of us building more into CAPS, on the other hand, are quite high. While I understand the wish by some to make CAPS a portfolio simulation, that was considered and rejected more than three years ago, and I couldn't be happier with the decision. In time, if people want their portfolio simulation game, we could likely add it to CAPS. But that said, the chances of a portfolio simulation doing more than stroking the egos of those who would inevitably game THAT system (every ruleset is gamed -- every one) may be high, but the chances of that also likely yielding good aggregate community intelligence are quite low. I wrote a blog entitled Maximizing Community Intelligence, and if you hadn't previously seen it I invite you to scrutinize it, as I think you'll see that our Foolish minds think alike.

So we're far more likely to ADD more into CAPS to diversify the information and experiences, than we are to strip stuff out or down. For instance, earlier this week I seized upon another way to rate people. It wouldn't replace the system we have now. It would sit alongside it -- another type of gauge. It isn't perfect either; nothing is. However, it is interesting. It is useful. And it would likely guide more people toward even more consequential and interesting decisions which I think would strengthen even further our community intelligence. I call our community "the world's greatest investment community" because I've been convinced for a long time now that we are, with I don't think any meaningful second-place finishers. And yet what we can build together -- CAPS being a great recent example -- is so much more.

The gist of your idea, if I remember it from reading your reply this morning (I will reread it another time) fits with our own thinking about adding in some additional confidence measure or weighting -- without making the experience unduly burdensome or complicated, and (importantly) in keeping with adding and enhancing the intelligence of our data. So stay tuned. Your thoughts -- and reactions to how we continue to work to improve the system month by month (please see improved Tags pages this month) -- are always invited and most welcomed. I really like the way you think.

Fool on,

David G. 

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#2) On October 19, 2007 at 2:38 PM, TMFSpiffyPop (99.79) wrote:

Excuse me, I was misremembering your primary ideas. Yes, it has been our intention all along to, in time, begin to group players into peer groups based on time ("Class of '08," etc.) and other measures too so that they will see how well they're doing vs. others who started about the time they did. This has not been a development priority, though, as we have too many other fish to fry and it is, more than anything, the passage of time, that begins to make this a greater urgency. And for now, we still aren't very far in. The day that a new player joins and can't get to All-Star plausibly within a reasonable frame of time will be when we go more strongly this direction. Of course, we have all the data, so the numbers are already in place and any further tweaks this direction involve just greater visual display and formating, not anything that has to do with our database.

Fool on,


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#3) On October 20, 2007 at 7:26 PM, fransgeraedts (99.71) wrote:

Dear David, 

thanks for your kind words.

We do seem to think along the same lines.

I agree with you that Caps creates a very exciting and evermore information rich (one could say thoughtfull) community of investors. To borough a concept from organisational learning theory ( a good source for thinking about Caps) we are together creating a community of inquiry ..investment inquiry to be exact.

In the post above i was thinking of ways to enhance the experience of participating in caps, ways that also enhance the information we produce as a community.

Three strands of thinking are present in the post. (1) Tweak the way charms are used in such a way that new players get more rewards ánd that rewards are permanent. (2) Create a second percentile score that compares you to people within your age group (better then "a class of 2008" would be i think to put every individual in the middle of "his own" time period)(3) Add the possibility to create within the main list a second, a sublist that follows different selection rules and is rated seperately.

All three could enhance the experience; the third would also create new information.

Another subject that i have been thinking about is blogging within Caps. I think there are several ways to enhance the blogging that is going on. Let me name a few.

(1) It would be very helpfull if it was possible to create something like a table of contents, a way for regular bloggers to group their blogs according to themes. I speak from my own experience in this. I am building trains of thoughts around more then one subject. Thinking about caps is one of those, for example. The state of the financial system after the credit crunch is another, etc. etc.

(2) There should be more "editing" going on. As i have written elsewhere, a very interesting debate has been going on in Caps about the deflation of the housing bubble and its aftermath. It should be possible to construct out of the posts that form the heart of that debate something like a multivoiced essay -complete with a list of links to the bloggers that contributed to the debate (cited or not) for further reading. 

(3) If we make blogging better structured it could become more interesting for "professional thinkers" to participate. its a complicated question how exactly to make their participation but it would be worthwhile. For example, there is a question floating around many a debate in Caps at the moment about liquidity; the way it is created, the role it plays in the financial markets. "The Fed printing money" is like a (wrong) shortcut poiting to that issue. It would be very helpfull if somebody could enlighten us by introducing and explaining some economic theory about it. I imagine that for many academics and/or strategists it would be interesting and challenging to take part in our community in such a way.

My last suggestion for now has to do with the fact that different strategies are being followed inside Caps. It would be interesting to "know" what type of strategy a certain player is following. There are several ways to make that possible. One way would be to make a description of a person's strategy an explicit part of their profile. That could be in the form of an answer to an open question, but also in the form of answering a short questionnaire (preferably both) Even more interesting would it be to make it possible for a player to "tag"himself. the creation of tags that people will use will be a source of information just by itself. And then of course it would also be interesting to see how others "tag"somebody's strategy -and whether or not there are differences.


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