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My CAPS Strategy

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December 19, 2006 – Comments (1)

I use CAPS as a sort of watch list, "if I had done that" sort of a tool. I try short-term strategies, playing the swings, that type of thing, and I also try underperform calls on companies I'm suspicious of. CAPS is just a game - you won't strike out. So, I like to try different things. What got me out of the hole with a score of -250 in the summer was largely because of me shorting renewable and alternative energy stocks that had been hyped up with nothing behind them. Seth and Russell definitely got me some great ideas in this area.

Since the CAPS rating is largely based on accuracy, I've been ending some picks (mainly underperforms) that have done really well and I'm not so sure will continue to largely beat the S&P in the direction I want them to. This gives me some stable accuracy points, and the rest of my active picks will hopefully go the way I initially thought they would. I'm getting less bearish on some of the renewable energy stocks, because they have been beaten down quite a ways. The companies with products are the ones are getting iffy to me, but scams like XNL I'll be riding down all the way. It's pretty easy to know a stock will go down if the company behind it doesn't have a product (Seth Jayson -- TMFBent -- is a good guy to follow to find these types of stocks).

CAPS is a great place to try new ideas, and I encourage all of you to do so. I don't think I'll ever be brave enough to short with my money, because many stocks will not go the direction they should be going, because the market is very irrational in the short-term. Right now I don't have the money to do short-term investing and playing the swings, but with CAPS I can try it out and see why I was wrong or why I was right. Try new things that have interested you. Try going against a certain analyst to prove them wrong. CAPS lets you do things you've been curious about with the stock market, so take advantage of the opportunity!

1 Comments – Post Your Own

#1) On January 05, 2007 at 12:46 AM, EScroogeJr (< 20) wrote:

pencils2,

betting against an industry on the advice of TMFEldrehad or TMFBent is OK for Caps, but it's not a strategy you can follow in real life. There were thousands of such TMFEldrehads in 1998-2000 who rightly considered the dot-com bubble unsustainable, and the bubble decimated their portfolios before the events of 2001 proved them right.

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