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Sell Rule for 'Underperform' Picks?



January 06, 2009 – Comments (2) | RELATED TICKERS: AAPL , GOOGL , MSFT

Fellow CAPS competitors,

Nearly half of my 194 active CAPS picks are 'shorts' (or 'underperform', technically). Given that all my picks were selected systematically through a screen, I don't have any particular insight on the average pick; i.e. I have not developed an in-depth fundamental understanding of the company, its prospects and its valuation.

In that context, I think it may be useful to institute a systematic rule for closing out 'underperform' picks that move substantially against me. 

My question is: What are your thoughts on an appropriate level to systematically close an 'underperform' pick? A score of -50? -100?

Please give some reasoning for your choices.


Alex Dumortier (XMFMarathonMan)


2 Comments – Post Your Own

#1) On January 06, 2009 at 12:18 PM, chk999 (99.96) wrote:

Closing picks that are negative really kills your accuracy ratings. I try to avoid closing picks in the neg at almost all costs. The best example of this was DRYS where I was negative 1000 for a bit. After two and a half years it finally worked out and I closed it at plus 13 and change.

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#2) On January 06, 2009 at 2:57 PM, Tastylunch (28.57) wrote:

What CHK said, I only close a losing pick when I discern there is no hope of recovery

(Like SIL being delisted)

it's an unfortunate CAPS flaw

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