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fransgeraedts (99.93)

On BravoBevo; deep admiration and deep puzzlement

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February 25, 2010 – Comments (12)

One of the more fruitfull undertakings on Caps for me has been to try to understand the strategy of other participants. I have studied for example cipostripes; floridabuilder; portefeuille; ultralong; zzlangerhans. And I have of course tried to understand BravoBevo.

Let me begin with saying that i really admire what BravoBevo has done. he is without a doubt the best Capsplayer  -by far. Moreover he has shown that he has found a strategy that creates profits independent of market direction. Just look at his steady rise.

At first blush his strategy seems pretty straight forward. Red thumbing overvalued stocks, especially stocks that have been pumped up, or that are scams, has been a timehonored and well proven strategy here in Caps. And BravoBevo seems to be doing something like that.

But then the mystery starts. He not only redthums the scams. He also greenthumbs over the counter speculative stocks. That makes a certain kind of sense. By green and redthumbing he creates something of a marketneutral strategy. But.... while i can understand the basics of finding the overvalued otc stocks... i do not understand how he finds so consistently undervalued otc stocks.

Especially intriguing is that he sometimes even greenthumbs stocks that other respected players that redthumb losers ..redthumb. And that he gets away with it.

I would very much like to understand how BravoBevo does what he does. Some of it i have noticed... for example in biotech he follows sometimes some of the specialist here in Caps. But that cannot be the only solution....

Of course i would very much prefer BravoBevo to explain his strategy himself. However i can absolutely imagine and will accept of course if he wont. That said, i would also hereby like to callenge my fellow Caps players to try and figure him out.

 

Please give it your best shot and lets try it to figure out how he does it. lets try to solve the puzzle BravoBevo is.

fransgeraedts  

 

12 Comments – Post Your Own

#1) On February 25, 2010 at 4:18 PM, TMFUltraLong (99.96) wrote:

It's very simple actually.... look for range bound very low volume over the counter companies and play the range...nothing difficult about that.

UltraLong

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#2) On February 25, 2010 at 4:24 PM, zzlangerhans (99.74) wrote:

Great post! I'm glad to see a top player acknowledge this phenomenon. I've dueled with BB before and always lose. I don't agree with the assessment above. "Range-bound" is a fallacy like most technical analysis. No one else is capable of duping BB in the OTC's. Try it and watch yourself get toasted as your green thubs go to 0 and your red thumbs hit the sky. Plenty of players are trying and failing. Similarly, don't expect your OTC picks to become active at the real-time price when you make your CAPS pick. I am completely unable to control the actual start price but I suspect BB can control his somehow. Perhaps intervention by a higher power?

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#3) On February 25, 2010 at 4:29 PM, TMFUltraLong (99.96) wrote:

ZZ,

Long picks become active at a stale price as long as there is volume on the board. If a range-bound OTC is down 40% on 100 shares you'll get that down 40% price any time of the day as long as you take it long. Same thing going short. All you have to do is spot something with 100-2000 shares traded that is well beyond its normal range of trading and there ya go! 

Perhaps I need to start an account called UltraBB to prove my point.

UltraLong

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#4) On February 25, 2010 at 4:35 PM, goldminingXpert (29.72) wrote:

You can't trade the way Bravobevo picks as the stocks are unbuyable and unshortable at the prices he gets (since the stocks he picks only trade once or twice a day.) He is very good at what he does, which is take advantadge of an odd quirk in CAPS design that allows one who has all day to search for odd price moves on bogus companies to score easy points. I don't have all day to search ... but I still take advantage of the easy red thumbs (National Golf Emporium... hahaha!) to keep up.

If you want to win at CAPS, follow Bravobevo, if you want to be a good investor, follow (most of) the rest of the top 10. If you should actually buy the crap Bravobevo green thumbs... suffice to say he green thumbed Repros (RPRX) which was a 100-point loser for him and was one of the easiest-to-see 2009 bankruptcies of a NASDAQ listed company. All cause he was trying to catch a quickie 10 points in the middle of RPRX's two-month decline from 6 to 80 cents. 

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#5) On February 25, 2010 at 5:32 PM, chk999 (99.98) wrote:

Interesting question. I hope BB will explain his strategy. He is way too good at what he does for it to be random luck.

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#6) On February 25, 2010 at 6:11 PM, ENDtheFEDnow (30.86) wrote:

I'm shocked at you guys who aren't on to BB's game.  It's simple -- take a thin-traded stock with low volume and a wide bid/ask spread.  If the stock trades at the bid, green thumb it.  If trades at ask, red thumb.  Voila!  Too bad you can't do that with real money!

 

 

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#7) On February 25, 2010 at 6:23 PM, BravoBevo (99.97) wrote:

GMX & UL are right.  I wouldn't trade for $ many of the picks that l select on CAPS.  I don't encourage others to do so either. I don't have a consistent rule, but I try not to chase a security. Instead I'd rather have a stock back into my risk/reward area that I'm more comfortable with.  If a stock has a generally flat to positive upward trend, I'll set a limit order about 1 or 2 standard deviations below the trend line (not actual calculated standard deviations, but eyeball estimates based on where that particular stock has traded before).  The less trading volume, the risker the trade; and the risker the trade, then the greater distance I'd like between the limit order point and the trendline to try to reduce the risk. And the reverse for a declining security.  Some days nothing hits and some days there are lots of hits. On the quiet days or on days when I've caught up on everything and I have extra time to poke around, is when I'll get too cute and try too hard to find a pick.

Today, my CAPS page added an extremely high number of picks: ENCC, EXXID, NATR, TECM, TRID, FURAF, CIT, ITWG. All of them except for FURAF and ITWG were the result of the stocks trading through limit orders - some with limits that I wouldn't use today if I were paying closer attention.For example, I hadn't even though about CIT in a long time, but my limit was there and it picked up the red-thumb.  I will probably exit CIT soon after the 1-week hold period expires.  I intentionally picked FURAF today on the news that it is getting the government approvals needed to proceed with its mining plans in South Africa. ITWG is thinly traded, and I got back in because I exited it by mistake.

gmx is right that some of the picks I green-thumb are crap.  Generally speaking, if I have a choice between making a really bad CAPS mistake by green-thumbing a stock that then falters or red-thumbing a stock that then soars, I'd rather go with the former.  That is essentially like buying a call that expires out of the money. My largest losers have been due to red-thumbs and my lack of patience. For example, if I had continued to hold my red-thumb on PALM, I probably could have closed it out today with no loss rather than the 100+ hit I took.  I know that I'm not as adept as others are in selecting red-thumbs, so most of the time I try to stay away from red-thumbs.

From time to time when I visit the Top Ten List page and I see the "Top Outperform Members" and the"Top Underperform Members" on that page, I never cease to be amazed at how many Fools have a really strong bias to trading almost exclusively with green-thumbs or with red-thumbs, but usually not with both ...

... which leads to my CAPS picking philosophy:  "Frequently wrong, but never in doubt."

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#8) On February 25, 2010 at 7:35 PM, APJ4RealHoldings (29.59) wrote:

Good to hear the final, humble answer directly from the Bevo

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#9) On February 25, 2010 at 8:01 PM, DragontoadX (94.40) wrote:

Hi BravoBevo-

 I'd also like to thank you for explaining your method... Clearly, you know what you are doing with the picks you are not getting "too cute" with. 

Aren't the limit orders relatively new to CAPS?  I know you've been awesome even before they implemented that feature.. do you use any particular softwareto monitor stocksyou're watching?

Thanks!

-Nathan

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#10) On February 25, 2010 at 10:45 PM, APJ4RealHoldings (29.59) wrote:

That is a great point, Bevo did amass lots of points prior to limit orders being in place...

...must be some high-tech, expensive real time mega-computer-link to-the-exchanges setup he has or something.

;)

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#11) On February 26, 2010 at 7:22 AM, cthomas1017 (91.98) wrote:

And Bravo for BB for your new CAPS summary.  I certainly didn't have a problem with the old one, but today's reflection is thought provoking and beautiful.  That said...

Gig'EM! :) 

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#12) On March 03, 2010 at 2:49 PM, fransgeraedts (99.93) wrote:

I would like to thank all...but especially BB himself..

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