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TheGarcipian (34.35)

KKK and the Investing Moth in Me

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April 12, 2008 – Comments (3) | RELATED TICKERS: MHO , TLB.DL , DRYS

Wa-hoo!  I'm back in the Top 100, coming in at # 90 today!

It's been almost four months since I last graced the Top 100, which was just before Christmas. Looking at the 40 picks I’ve made since Christmas, I see that the worst performer in all my 19 months of playing CAPS was picked on January 9th, 2008. That stock is MHO, and no, that doesn't stand for My Humble Opinion, though it has humbled me, singularly losing me well over 140 points, thank you very much. Quite disheartening. (I know, I know. Don't talk to Russell TMFEldrehad about DRYS---ok, mum's the word). And I lost those 140+ points in fairly short order. True to the demonic imp that rides my shoulders, second-guessing every bloody step of my investing career, I picked MHO to sink lower at exactly the absolute minimum point so far this year, January 9th. Don't believe me? Check out the chart.  Impressive, eh?  Think that’s funny, do ya?  Yeah, hilarious…

[taunt] I dare say you could do any better at being the anti-Christ of stock picking, but I’ll entertain any grousing you want to throw back my way. Any investment timing story you have, I’ll be able to top it, more than likely. Let’s just call it “Kopious Kathartic Kvetching”... [/taunt]  And now you know why I entitled this blog the way I did. Gotta get you people in here somehow to read these thoughts, right?  :-)

So then, if I suck so bad at timing, how is it that I’m doing so well in CAPS after such a miraculously crappy pick, coming back from 1538th place and roughly 1500 points on 1/31/2008 to reach 90th today with almost double the score? Well, dear reader, as it's been said many times before, it's not your timing of the market, it's your time in the market. Not that 4 months is any significant time in the market, but considering how CAPS allows players to swap in/out of stocks with no regard to trading costs, four months could be seen as an eternity. Frankly, I don’t have time to devote hours each day to closing and reopening positions, all in an attempt to raise my score by single digit gains day-in and day-out. Part of me wishes I did, but part of me is glad I don’t. But I sincerely applaud those CAPS players who do have that kind of time (you lucky dogs!), and to their ability to beat the game. I very much appreciate them sharing their thoughts through pitches and blogs (in that order) to illustrate trends they see. I struggle just to get in a couple of blog posts a month! But if it’s for the sole purpose of besting the CAPS system and not for turning that knowledge/expertise into any real money, well… … I’m not so interested…

Out of the 40 stocks I've chosen since Christmas, I am still holding 31 of them in CAPS. While twelve (12) of them are thumbs-up picks, a robust nineteen (19) of them are thumbs-down; it is a bear market, after all. What?! A bear market?! Are you still hibernating from your winter’s nap? The bear is out of its cave, partner, loose and running down Main Street. Better get your house bear-proofed and in order… Still, I was curious: which of these 40 picks was the workhorse that pulled my CAPS butt out of the portfolio ditch? (Not that being 1538th is being in a ditch by a long shot, but I hope ya get what I mean…) So, which one of my recent illustrious picks was it? And could I repeat that luck again?  Come on, man, inquiring minds wanna know!

The Answer: None of them, surprisingly. Sure, I had some real winners over the last 4 months (MOS, CCTC.PK, and FNM), but I also had some real losers (most notably, BZH, TLB and MHO – you’re still going down in flames, MHO!). With some quick addition, I found that all 40 recent picks have only added about 80 points to my overall score. Eighty points? That’s all? So, where did the other 1400 points come from?  Answer: my other holdings. 

So, I literally could have done nothing over the past 4 months and had roughly the same score I have today. Okay, Sigmund, maybe I’m trying too hard to justify not having time to swap stocks like a banshee. But seriously, I think this does show (a bit) that if you’ve done your stock picking homework, time in the market will eventually lead you to the Promised Land. (And that also means Talbots and MHO will fall from where they are today). I’m not sure I want to give up looking at the stock market each day (like a moth to the flame, baby), but I am strongly resisting the urge to take some action, despite the fiend poking his foolish fork into my Foolish brain crying “Trade! Trade! Trade!”, reminding me of how much money I lost in the 2000-2002 slide...

Now, with that said, I’m sure that lil’ devilish imp on my shoulder is just itching to crank down my Score over the next few months… he just loves to taunt the moth in me. Now, kvetch away!

3 Comments – Post Your Own

#1) On April 12, 2008 at 7:54 AM, dwot (28.83) wrote:

Caps is not a measure of the money you can make what-so-ever and after the market bottoms, its scoring system is designed to leverage points based on time in the market.  You have a stock that doubles, you get double points for increases.  In that sense the game will ultimately favour players who start earlier.  It is about the game of being able to say what percent you out perform the S&P and longer term into the game it will completely hide mediocre or poor performance.

Reading news and blogging takes way more time than opening and closing a few picks.

I tended towards trading in real life as well.  I never intended to.  I went for stocks that I saw value and they'd often do a nice jump in a fairly short time period and I'd sell.  I did very well despite the trading fees.  I suppose I doubled my margin account in about 4 months, but then I saw the writing on the wall that the market was going to tank so I just took the whole thing and applied it to debt.  That was last spring.  I had double after the trading fees.  Who cares what I would have had without the trading fees, it wasn't mine.

You want to play a game that reflects the money you can make, play marketwatch's virtual stock market.  I was in a class where the kids were playing the game and the one student managed more than a double in 6 weeks.  That game charges you something like $40 per trade, I think.

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#2) On April 12, 2008 at 7:21 PM, Tastylunch (28.51) wrote:

-dwot

the commission in VSE is set by who ever sets up the league you are playing, could be any value. I doubled in 2 weeks playing that game shorting homebuilders. If only I had done so in real life! 

congrats on your success Gar, I think most of the top players know in the long run the advantage will swing to the green thumbers that let their picks run smartly. Spec Bear likely can't be number 1 for ever with his strategey. 

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#3) On April 12, 2008 at 7:22 PM, Tastylunch (28.51) wrote:

oh and for the record I'm gald you didn't blog about the real KKK, I have some bad memories about those losers.

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