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My Master Plan to Save CAPS!

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January 03, 2013 – Comments (27)

I remember when I first joined CAPS  when it was in beta phase back in 2006; I think TMF started with a handful of select subs and staff and then opened it up to the unwashed masses like me in their sub community and it was the greatest thing since sliced bread. It seemed like everybody loved it and was addicted to this new service in it's first year or so however even back then I didn't really buy into the community ratings premise of the service. There were complaints about the player ranking system, myself included and they probably persist today but that's not what I'm here to write about. One of my favorite aspects of the competition is keeping track of interesting players in the competition via favorites. I've noticed in recent years most of the 20 or so favorites I've added have significantly reduced their new picks and blogging in CAPS or dropped out altogether including most of the TMF staff. One favorite who hasn't is TMFDeej and I happened to mention this too him the other day posting on one of his regular blogs. His response was something like yes, it's a shame that CAPS seems to have been orphaned in TMF, it's probably because it's not generating enough revenue. TMFDeej then remarked about a potential missed opportunity for the service to be on par with Seeking Alpha's service.

I never really thought of CAPS as a business but TMFDeej's comments got me to thinking about how CAPS could be transformed into something rivaling Seeking Alpha. I don't really know the economics of either service so I'm not going to focus on revenues except to assume that a rejuvenated CAPS could help drive subs to TMF's services. Based on the little bit I know of S.A. it seems like they generate revenue via some sort of fees from Yahoo and other sources for their articles and I'm going to make a case for something like this in CAPS as well. In a way what I value about CAPS is almost the exact opposite of it's original premise. I probably don't spend a split second contemplating the CAPS rating of a stock I'm interested in. Instead I value being able to track individuals that interest me for one reason or another and seeing their real life performance warts and all over long periods of time. I also value tracking myself warts and all over time with a gauge to judge myself by. My initial thoughts when mulling over what to do with CAPS now was to focus on this aspect of the competition and start marketing this to the CAPS community and potential players.

I did think that rethinking the service as a business probably needed more than a different marketing plan and I think I've come up with a way to tweak the model as well. Just like TMF provides newsletters dedicated to different types of investing philosophies and styles I think CAPS could start providing sub ranking systems like growth vs. value or an income focused category. I could see encouraging players to set up specific portfolios for these sub categories and searching players who excel at picking stocks in the categories within their broad based portfolios. I would add categories like Health Care or International Investing etc... and give players with talents picking stocks in the different categories some visibility and recognition. I would also co-opt the S.A. model here and encourage the best stock pickers in the different categories to write about their best ideas even compensating them ala S.A. I would think these articles could then be sold to services like Yahoo where TMF could generate revenues and spark interest in CAPS in a virtuous circle. One big advantage that I think CAPS would have over S.A. here is the CAPS article authors have a long term public track record to enhance the value of the articles and recommendations.

Writing has never been my strong suit and in addition to not having clever ending come to mind right now I am sure I'm forgetting ideas that will come to mind shortly after hitting the send button on this blog but this is my grand plan to save CAPS and hopefully some member of the powers that be in TMF  land see this blog and ponder the possibilities

27 Comments – Post Your Own

#1) On January 03, 2013 at 1:46 PM, chk999 (99.97) wrote:

I remember the heady days when CAPS was in beta and this whole new world opened. But TMF seems to have a model of trying a lot of different things and then pretending that the ones that didn't work out never existed. I think one of original sub goals of CAPS was to find out if the picks of the highest ranked players generated enough alpha to use them as a stock selection mechanism. It doesn't look like this idea worked out in real life, I know I ignore CAPS ratings when picking companies to buy with real money. Too many highly ranked stocks never actually outperform.

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#2) On January 03, 2013 at 2:57 PM, L0RDZ (83.11) wrote:

Chk,  it  was  suppose  to be  team-work,  but   the collective  minds  usually  got  it  wrong,  if  I  remember  correctly.

I agree  on  cap  ratings,  with real money.

Plus  who cares  about  outperforming the market...  it  should be about  your  portfolio  doing  well  or  being  subjected  to less risk.

Instead  it seems  most investors  are subjected to  too much risk  for the  returns  or  lack of returns  they receive.

My memory is  fuzzy  as  I  have  been  re-animated... 

as  a  zombie...

lol

Funny  how  they wiped away  a  certain name...  but  it still lingers.

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#3) On January 03, 2013 at 3:07 PM, ryanalexanderson (< 20) wrote:

Maybe TMFDeej can convince TMF staff to spin off CAPS in a special situation that will unlock value for all the stakeholders! 

:)  

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#4) On January 03, 2013 at 3:14 PM, MKArch (99.73) wrote:

I like your idea better than my own Ryan!

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#5) On January 03, 2013 at 3:17 PM, L0RDZ (83.11) wrote:

Splitting  ten  dollars  can  be  hard...

 

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#6) On January 03, 2013 at 3:54 PM, MKArch (99.73) wrote:

chk999,

 My guess is we both ignore the community ratings in CAPS for the same reason. What good is a stock recommendation without analysis to back it up?

I'll use TMFDeej again as an example of how I think CAPS could be transformed. I saw in one of his posts that he comes from the automotive industry. I don't know how his auto industry picks have done but judging by his overall performance I'd guess they've done well and he would likely show up among the top players in an all auto industry picks ranking. My guess is he would also set up a separate all auto stock CAPS portfolio if he was encouraged to do so. I would also guess that with his credentials and verifiable success in CAPS, Auto industry articles he wrote would have a lot of credibility and would be a great value inside of CAPS and as a source of revenues and advertising outside of CAPS. IMO the value of CAPS is in subs,ranks not the stock ratings.

I was a long time H.G. sub but had to drop the service for personal reasons that had nothing to do with the service itself. One of my favorite analyst at H.G. is TMFPlatoish who I know has a strong technology background and was in fact elevated to TMF status for that very reason. I know he's done well in CAPS but I don't think he is very active anymore. I'm guessing he'd wind up at the top of a technology focused sub category and would be a valuable asset to CAPS contributing there.

That's the kind of direction I think the powers that be in TMF should be thinking about for CAPS if indeed they have finally thrown in the towel on the community stock ratings angle.

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#7) On January 03, 2013 at 4:52 PM, ChrisGraley (29.69) wrote:

The scoring system skews the ratings. Good stock pickers are penalized for admitting a mistake and closing a bad pick, so they keep a pick that they would have closed in a few weeks for a few years. The pitches of the best players are extremely valuable though. This type of platform could make so much more money than seeking alpha if someone looked at it as a stand alone business opportunity. 

For an enterprising young web programmer, there is a tremendous oppportunity here. 

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#8) On January 03, 2013 at 4:58 PM, zzlangerhans (99.77) wrote:

Seeking Alpha is not something to be emulated. Seeking Alpha does not track nor hold accountable their writers for performance, they only care about page views. Seeking Alpha is full of dedicated stock manipulators and instead of attempting to eliminate that behavior from their site, Seeking Alpha has chosen to exploit it for profit by selling an article frontrunning service.

What Motley Fool does have that is valuable is a performance rating system. Unfortunately, that system proved to be gameable through multiple loopholes and when Motley Fool failed to close those loopholes, skilled stockpickers became bored or frustrated and abandoned the site. CAPS did have a lot of potential but there was no one with the vision to transform it into a comprehensive site that could have been the "Facebook for stock traders".

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#9) On January 03, 2013 at 5:35 PM, ChrisGraley (29.69) wrote:

 zzlangerhans is the guy I follow if I pick biotech stocks btw.

His insight in these stocks is simply amazing! 

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#10) On January 03, 2013 at 5:38 PM, Option1307 (29.69) wrote:

This post is pretty much the best summary ever! I think most Fools are bored/tired of the way things have turned out

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#11) On January 03, 2013 at 5:41 PM, Option1307 (29.69) wrote:

There are still some great people around the Fool though that I like to follow closely, so that's a plus! Keep up the good work Fools!

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#12) On January 03, 2013 at 7:18 PM, chk999 (99.97) wrote:

MKArch,

I totally agree about TMFPlatoish. His writeups were awesome and some of the best analysis done here. But he ended up mostly writing for the pay services and so we don't see him doing much anymore.  

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#13) On January 03, 2013 at 9:25 PM, VExplorer (29.68) wrote:

Guys,  Do you know any site which will  appreciate publishing of real audited portfolio with good performance? do you know a lowcost service for this kind of audit? Is it interesting?

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#14) On January 04, 2013 at 10:24 AM, Schmacko (62.21) wrote:

updown.com had what looked like a good model.  You have a portfolio of like $10k worth of fake money you manage while still having the ability to blog about your picks and stock ideas.  The portfolio gave you a track record that other users could check on as a way to weight your blog ideas.  If your portfolio did well they'd pay you some miniscule amount of money, but still some money.  And it had social networking aspects that are lacking in both CAPs and SA.  It just never seemed to take off though.

SA is now the place I go to look through public opinions on stocks.  The CAPs star system has always been worthless and the player rating not much better, since it was too easy to game/manipulate for those that felt doing such was worth while.

There used to be some good regular bloggers here but the vast majority of them seem to have left for greener pastures.  Now it seems like the vast majority of bloggers are dividend stock financial advisor types pimping their own sites through a CAPs blog presence.  I still occassionally get some ideas here.  Deej is probably the best of the active bloggers, imo, cause he actually presents investing ideas.... on an investing website... novel concept. 

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#15) On January 04, 2013 at 11:25 AM, MKArch (99.73) wrote:

I've never heard of updown Schmacko but it does sound like it's on par with what I'm suggesting for CAPS. I don't know how many subs updown ever garnered but with 75,000 in CAPS it might have a better chance. I know from my H.G. days they had an outstanding message board system in house that was actually my favorite part of the service. Knowledgeable people tended to get noticed there and that's what I'm suggesting for CAPS 2.0. Start focusing on getting knowledgeable people in difference fields and investment styles noticed. You would also likely fix the gaming the system problem if CAPS changed their focus to rewarding quality people in different categories over CAPS rank.

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#16) On January 04, 2013 at 11:57 AM, portefeuille (99.61) wrote:

#6,15 see comment #10 here -> http://caps.fool.com/Blogs/dear-fool-please-dont-turn/727062.

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#17) On January 04, 2013 at 12:38 PM, Schmacko (62.21) wrote:

#16) That zzlangerhans rant/suggestion blog that you link to in the comments of that link is pretty awesome.... too bad none of those ideas happened....

Finding the true gurus in CAPS

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#18) On January 04, 2013 at 2:19 PM, TSIF (99.96) wrote:

Select MF bloggers are being paid now on the blogger side. IT is suggested that they make Capshots/picks to demonstrate a record, but most don't.   This does reduce the bloggers on this side.

Regarding monetizing the site, of the 75,023 "players", 69,459 or 92.4% have bombs, no picks in 90 days. 

The variable of accuracy causing picks to remain open after they are no longer meaningful, abandoned accounts, and "following" all skew ratings as others note. For anyone "new" achieving a meaningful level or niche is difficult. The MF "analysts" will claim success with the rating system, but it doesn't hold water. Over time it is indeed worthless.  Looking at the trend for the last few months on picks is sometimes helpful.

CAPS is a data collection forum, and some opinions are worthwhile to review. Overall, its in a downhill spiral with no catalyst for change.

The simplist change in my opinion, and caps is full of them, going from free to $0.02, to $0.03  etc...  :) would be the "ROLLING ONE YEAR" time frame of most metrics. Other metrics could be kept for historical data. 

One year rolling metrics would keep ratings, comments, recs, scores, etc at a level where others could achieve goals/metrics.

Good luck to all.

TSIF

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#19) On January 04, 2013 at 2:59 PM, TMFBlacknGold (98.45) wrote:

I've always been a big fan of CAPS,  despite its flaws, since I joined in 2009. For me it has a pretty cool meaning, since the day I joined was literally my first day in the investing world. This is demonstrated by my early picks for the first few years (into 2012 even),  but hey, you have to learn somewhere. CAPS provided me that opportunity. 
I was brought on as a contract writer this week from the just over 1 year old TMF Blogging Network, although I was a member of CAPS before I tried my hand at financial writing. As TSIF mentioned above, not many bloggers are active in CAPS. 
At any rate, there are many ideas on how to change/fix CAPS. 
 I'm not sure if it will ever really generate revenue directly, but I've been told that ad revenue is not a very big stream either.  Sorry basically the point of the Blogging Network was not to garner clicks, but to pull people into the portfolio services. 
It is my feeling that no one wants to amend the system for fear of tweaking the wrong parts. For instance, how do you change the player rating system without scaring off some big players? Adjusting the points or accuracy portion of the rating could crush some ratings. Mine could easily be below 70.
Maybe we get all players to confirm that they are active once every year. If you don't respond, then you get a boot or at least some type of lower weight in the system. 
I guess the point made here is that player ratings are not necessarily the most valuable part of CAPS. I do agree that something should be done to make it more realistic or to allow sector ratings. Imagine how much more addictive it could get with a few simple changes! It's scary! 
Maxxwell 

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#20) On January 04, 2013 at 3:06 PM, TMFBlacknGold (98.45) wrote:

Upgrade number one: make CAPS comments smartphone friendly. 

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#21) On January 04, 2013 at 4:31 PM, outoffocus (22.84) wrote:

Honestly a CAPS rating reset would not be a bad idea.  I wouldn't really care if it scared off a few big players.  Most of them are just living off of past glories during an unprecedented time anyway.  If they were able to score high before, they should be able to score high again.  Otherwise it would be nice to see some new blood in the top ten.

But TMF would have to be willing to market CAPS again.  I used to like looking at CAPs as part of my stock buying due diligence.  Back when CAPs was active and up to date, it was a phenominal tool to find out what I may have missed in my general due diligence.  It also taught me alot about how to do due diligence on a stock.  To deprive new investors of that opportunity is a travesty.  

I vote for a CAPS rating reset.  I would be happy to reselect my picks.  It would prove a good exercise to figure out what stocks would thrive in this environment. 

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#22) On January 04, 2013 at 4:44 PM, MKArch (99.73) wrote:

TSIF,

I've seen the freelance writers and similar to S.A. there are good ones and bad ones. In general my impression of M.F. freelance writers and even the regular staff they mostly stick to generalities and don't get in to enough detail on the free side articles. I had always assumed that a large proportion if not most of the 75K players were not active but the numbers you cite are scary.

BlacknGold you bring up some good points and I did consider that scraping the old CAPS would irritate those who have dedicated time and effort to this system. While if TSIF's numbers are accurate there aren't many players to tick off I don't see my recommendations as a replacement to the current CAPS but in addition to it. You can keep ranking players the same. One of the suggestions linked in another post in this thread had some great ideas about having the ability to screen out ETF's and OTC stocks. That's the direction I would like to see CAPS 2.0 go. In addition to being able to search players adept at picking stock in different categories, I'd like to see message boards dedicated to the different categories. I'd like to be able to sort messages and blogs by tickers and recommendations.

 IMO TMF could just take what they've done already and do a better job of making it relevant. If the value in CAPS is in driving people to the pay services I think a rejuvenated CAPS 2.0 could do that bringing back players who dropped out and attracting new ones.

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#23) On January 04, 2013 at 7:21 PM, TSIF (99.96) wrote:

Participation levels vary by peoples motivation. The motivation to learn can be an influence, but it's greatest after the market has had a huge catlyst such as the 2008-2009 period. Motivation could be just to track some ideas or garner input on a few stocks.

Some, however, are motivated by reward/recognition.  CAPS is perfect (or was) for some looking to learn or those with a few picks to track.  Not all of the bombs are non-participating players, but I would suggest that the few that are active are not looking for recognition.

It's human nature for some to look for recognition and that's were scoring, charms, top tens, etc come into play.

For example. The system was mature when I became active. The PITCH REC top ten list seemed secure to those holding it, but I found a niche in making pitches. Some to query/learn/solicit, some to record my own thoughts etc.   When I climbed on the Top Ten pitcher list, I gained more confidence. One day I was at the top of it and geared to maintain it.  I would have pitched without the list, but it was a goal/metric I could achieve that added some motivation. Then one day a player created 6-8 fictional players, commented to him/herself back and forth and "self -rec'd" all one of their players pitches, screaming to the top of the pitch rec by thousands.  My motivation waned.

I've seen similar on "most recommended posts".  The top four are blogs where some outside rec'ing system was allowed, or so the story goes and one player's blogs went viral in rec's.The metric is hardly attainable by others who were eyeing it.

Similar for other blog/top metrics etc.

No, everyone is not motivated by rewards/recogniton, but for many it's nice to have "goals". I set goals and measure them in everything I do. For others maybe tracking their plays is enough.

CAPS, however started as a competitive system for motivation. The metrics were there, including top player score for many people.

Those aren't there anymore. Some by glitches or backdoors.

A reset of some or even all of these might irk some people, but i might motivate others. A rolling period of time would allow old metrics/achievements to be archived, and new goals for others that were attainable.

Limiting ETF's, even putting them under the same volume rules as other equities so only more active, real life ones were available might also be a balance, but again there are multiple recommendations in this area that do conflict.

As MKArch indicates, sector "Kings" is a form of recognition and motivation.

To those who argue this is a free site and you get what you pay for, I continue to strongly disagree. CAPS is a feeder to ads, (revenue stream or not), multiple links on the investment boards from the pitch quotes/articles, information, tool, etc, that all who participate feed into. The feeder to grow CAPS grows the other services.

Pretty much speaking to the choir on these blogs that pop up sometimes with suggestions or reminising the old times.  The platform wasn't designed with competition in mind over multiple years and market gyrations and it doesn't function as well without some competition for those looking for it.

Good luck.

TSIF

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#24) On January 04, 2013 at 8:12 PM, TMFBlacknGold (98.45) wrote:

Let's not forget that TMF is still very much interested in CAPS, as witnessed by their recent roll out of CAPScalls for authors/bloggers and the timely CAPS community articles that cite pitches from the community. Although it seems counterintuitive to request authors to keep track of their picks when there is so much noise built into the rating system for players and stocks. Maybe all TMF needs is someone to take up the issue (an internal champion of the cause) to revamp CAPS. 

@MKArch

I like your proposal for sure. I only offered a change to the secret sauce of CAPS - even if it is a thorny issue - to address the gorilla in the room. Some combination of all the ideas presented would likely be best. Your suggestion would be the top priority ;)

@TSIF

I agree wholeheartedly about your comments regarding recognition and motivation. I would be lying if I said I didn't enjoy seeing my player rating increase over time, especially once I made it a part of my daily routine. I know others feel the same.

Before leaving the Blogging Network I received an email that they were targetting a newer, fresher, more home-grown look and feel to the page layout. They even talked about adding charms/badges and other forms of recognition (incentives) for the bloggers. It is my understanding that this system will be rolled out in the next month or two. Perhaps in a perfect world some of these changes will spill over into CAPS.

I am only a contracted writer and have little to no say in TMF, but I will poke around and try to gauge Big Fool opinion about CAPS and possible changes. It would be nice to know what the insider opinion of the system is and what, if any, plans they have for CAPS going forward. I do remember several TMFplayers commenting on these types of blogs over the years, so it must have been an active discussion at Fool HQ relatively recently.

Maybe they will be open to making changes, which I think would be more likely if they can tie it into their "free" and "special" reports. This may be possible with sector leaders as mentioned above.

Best, 

TMFBlacknGold

 

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#25) On January 04, 2013 at 9:12 PM, Option1307 (29.69) wrote:

One of the things that bothers me most, besides the talent leaving, is that we never really here any feedback from TMF regarding what their goal is for Caps. Repeatedly over the years many Fools have voiced concerns and proposed fixes and them seem to fall of deaf ears.

It would be nice for TMF to simply reply occasionaly and say "we hear you and wait for the new platform it will be better" or "we gave up on Caps years ago, you're still here?!?" Ha ha hopefully not the later but communication is lacking and that drives me crazy!

I've been a member of Caps since 2007 and have learned a ton from the members. I can honestly credit a majority of my successful invcestment ideas from fellow Fools. However, things on this site have drastically deteriorated from the golden days. Partly becuse of talented Fools leaving, but also because of the site itself.

TMF is driving Caps to be obsolete, what once was the prettiest gal in all the land is soon becoming the red headed step child of the investing world. 

And the worst part is I'm not sure if TMF cares or is entirely aware of the issue.

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#26) On January 28, 2013 at 4:35 PM, JakilaTheHun (99.93) wrote:

Great post, MK.

I'm disappointed by how CAPS has declined, as well.  It's really nothing more than a case of negligence.  This community is actually so strong that even in spite of that negligence, a lot of people are still posting and at least checking in.

CAPS has so many people who are willing to work for free, you'd think TMF could take advantage of that.  Even if it didn't generate a ton of direct revenue for them, it would attract more people to the site, which is marketing for the rest of their services. 

Maybe that's the real problem here.  TMF is disappointed by how CAPS contributes very little to their bottom line, but they analyze it as a stand-alone business, rather than as a loss-leader / marketing platform. 

Wish there were a way to re-create CAPS outside of CAPS, but I am not a programmer. 

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#27) On January 28, 2013 at 4:45 PM, MKArch (99.73) wrote:

Thanks Jakila, you are one of my favorites of my CAPS favorites and I follow you on your own Malthusian Nectar site as well. Contributors like you make CAPS, thank you for your good work here and elsewhere. It doesn't go unnoticed!

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