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Varchild2008 (84.41)

Motley Fool is Broken....You are all making my point (almost)

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May 18, 2008 – Comments (7)

My intent was the silliness in that one is not locked into their stock pick times and the inherent abuse of closing out picks early.  I was not interested in what the perfect strategy or formula of abusing Motley Fool was or is....

I don't think Motley Fool Stock Picking is the same as investing with your own money as some have suggested.  There are some examples I will show where it is not.  Ultimately,  it should be:

1)    There is no degree of certainty.  Just as we may put more of our money into an oil stock that's doing hot this year versus a longer term investment or vice versa ..... A degree of certainty if introduced to Motley Fool would force a percentage into our stock picks.  This limits stock picking from 200 to 100 stocks.  0 - 100%

2)  All stock picking is based on the opening trade price and in real life we (investors) sometimes like to wait to buy in mid-day trading if we are certain to expect a cheaper buy in amount.

3) Without #1 (degree of buy-in....degree of certainty), dividends are handled differently based on some flat-rate formula based on how many cents per share the dividend and yield is.  I am not sure how this works exactly but it would be different entirely if more of our money/certainty was in 1 stock instead of another.

Sure fine I can go ahead and play along with the system as is and exercise new strategies and even perhaps ditch my Bear Sterns stock pick.  However, my point is Motley Fool is still in BETA TEST and I am here to say IT's BROKEN....Don't Justify It....FIX IT.

7 Comments – Post Your Own

#1) On May 18, 2008 at 10:20 PM, Varchild2008 (84.41) wrote:

If I suck at stock picking and perhaps I do... I am a NEWB afterall...  Why am I an all star?  I should not have that rating if Motley Fool was held to a higher standard before this BETA comes out of BETA.

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#2) On May 18, 2008 at 11:10 PM, LordZ wrote:

Whats worst is someone could actually have a awesome score but  be a lousy investor, its possible to gain and lock in points by picking a losing stock that just doesnt lose as bad as the whole market.  Similiarly lets say that the market as a whole dips 6% and your stock blows but lets say it was already beaten down and because it couldnt dip much lower only drops 1% more... well guess what you hit your 5% and now you could lock in that score and look good even though had you bought that stock you still would be losing money !!!!!!!!!!!!!!!!!

 

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#3) On May 18, 2008 at 11:11 PM, LordZ wrote:

There are many all stars that I look at their picks and scores and I can only shake my head and laugh..

knowing that had they invested real money they would have lost money...

 

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#4) On May 19, 2008 at 7:43 AM, rudolphsteiner (< 20) wrote:

Degree of buy-in is not a bad idea, though perhaps complicated. But I disagree with LordZ that many top players would be losing money. And ultimately I'm not sure individual stock picks are the be-all end-all. Let me explain. 

A lot of points and accuracy are being made or lost on sectors. I think it's true to say that most of the top ten made a lot of points shorting financials and real estate. Others have done well on gold. I'm doing well based on energy and energy related plays (eg long rail, short airline). To be honest, I think it's more important to spot big trends than individual picks. In my real portfolio individual picks have been my bread and butter - for instance I picked up BWEN for under 2 bucks (10x return). But even then, this pick comes out of an investment premise that energy demand exceeds supply, which has so far been borne out. If I'd been wrong, BWEN would have flopped.

You are very critical LordZ, perhaps with some justification, but I think on the whole scores are deserved. The top players are often playing the trends, sometimes before they become obvious to others. There are lots of things I don't like about CAPS (especially the accuracy loophole with ended picks), but I do think the top players have an understanding of the market, and when that understanding fails, so does their score.  Looking at how people are playing the market is educational, even if you think they are wrong in the long run.

And ultimately, the stock pitches are probably the most useful aspect of CAPS. When I'm considering buying a stock I do in fact go read them, discount at least 90% of it, and come out with a few new facts.

By the way varchild, I'm pretty sure you can pick a stock at any time of day

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#5) On May 19, 2008 at 11:19 AM, FourthAxis (< 20) wrote:

2)  All stock picking is based on the opening trade price and in real life we (investors) sometimes like to wait to buy in mid-day trading if we are certain to expect a cheaper buy in amount.

Incorrect.  20-minute rule.  

Weighting (degree of certainty) would be cool for me, but I'm not interested in lucky traders either.  I would start paying attention to accuracy then.

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#6) On May 19, 2008 at 2:23 PM, Tastylunch (29.94) wrote:

My intent was the silliness in that one is not locked into their stock pick times

Most professional analysts have price targets as well as time components to their ratings. Time is not the sole consideration. If a stock hits your target price you have every right to close the call. Real world and in CAPS. That is useful. Being locked into a specific time period without considering price/valuation makes no sense. Analysts amend their price targets all the time based off new info when it comes available .

Analysts also don't typically weight their ratings (though some do). Weighting CAPS calls imo would decrease community intelligence as well as discourage picks. The goal of CAPS is not to see who has the best stock portfolio or money manager, the goal is to create community based ratings. CAPS is a ratings game not a stock picking game.

Basically by playing the game we serve as wiki stock analysts for the fool. So yes I understand your point about degree of certainty but I think that's unnecessary for CAPS given the fact you can consider a player's past success (specifically accuracy) in evaluating their call. Plus while you can't weight picks, CAPS does in it's star ratings. ALLStar opinion is weighted much more in  determining a stock's rating than average players's calls.

I'd rather trust a whim from a player who is right 80% of the time on a large number of picks  than a surefire pick from a player who is only right 50% of the time. 

I don't buy your argument that CAPS is broken. Sorry. 

Hope you don't think people are doggin' you (certainly that's not my intent) , a lot of us just don't agree with what you are saying. 

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#7) On May 19, 2008 at 9:00 PM, Varchild2008 (84.41) wrote:

Oops!  You are all correct about the 20-minute rule.

Of course, it would be nice if LIMIT PICKS were added where we would outperform a stock once it hits our limit or underperform it.

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