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AntiRonChapmanJr (< 20)

Some CAPS Leaders Couldn't Find an Outperforming Stock If It Hit Them in the Face



February 27, 2009 – Comments (16)

For quite a while now, I have been posting about how picking garbage to underperform (like I am doing with this portfolio) requires little to no skill. So for all the players out there who pay attention to the top 20 or so players trying to find good, outperforming stock picks, pay attention to how those CAPS leaders got to where they are. Double check their CAPS record.  Have they actually picked outperform on anything or do they just short garbage? Do they bet against entire sectors? Do they have a skeptic charm? Beware the garbage shorters because it is easier than you think.

Yes, that's what I meant to write.

I think there should be an optimist charm which indicates that a person has chosen outperform on more than 75% of their picks. Then it would be easy to avoid certain portfolios when doing research. If you want to know whether I am any good at picking stocks to outperform, the answer is "yes", and you can check out my other portfolio - RonChapmanJr - to see for yourself.

In an attempt to keep the usual complaints about this post to a minimum I want to clarify that the purpose of these posts is simply to warn any new CAPS members about blindly following CAPS leaders.  I don't care about people gaming the system as I have done that at times.  I also am not acting out of some disappointment with this, or another profile.



16 Comments – Post Your Own

#1) On February 27, 2009 at 1:24 PM, outoffocus (23.03) wrote:

I thought thats what "yes man" charm was for.

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#2) On February 27, 2009 at 1:34 PM, mickeyc21 (30.06) wrote:

Caps has a major "thousand monkeys banging on a typewriter" bias.

There are probably literally less than ten people who post here that make money in real life (I can only think of two but I'm being generous).

One of the top fools has admitted that they don't trade ever in real life! This person has made it to number one on occasion. 

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#3) On February 27, 2009 at 1:39 PM, kdakota630 (29.00) wrote:


Keep in mind that when the market drops 50% in a year, most people won't be making money.

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#4) On February 27, 2009 at 2:05 PM, RonChapmanJr (30.06) wrote:

outoffocus - The "yes" man charm is for people who have never picked an underperform.  There are a lot of good stock pickers that feel the need to pick a stock to underperform for various reasons.  I want to identify people who pick outperforming stocks most of the time, but do not have to only pick them.

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#5) On February 27, 2009 at 2:58 PM, TMFJake (94.81) wrote:

Just as you post this periodic critique Ron, I'll post my periodic reply that more people get creamed with this strategy than rise to the leaderboard. That said, I do agree that you should pay attention to how someone is acheiving their score and not just blindly follow someone based on their rating--i.e. if they earned their rating through red thumbs, take their green thumbs with a grain of salt..

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#6) On February 27, 2009 at 3:59 PM, mingusdew (32.23) wrote:

also be aware of how CAPS scoring your picks against the performance of the S&P affects the scoring and accuracy rating of outperfom calls.  It's possible to have an outperform pick with a positive score (sometimes worth +10 or more) despite that stock actually being down from the start price, provided the S&P index has fallen further in the same time period. 

I understand what the people who created the CAPS rules were trying to accomplish by weighing picks this way, but it ends up being practically flawed in a market like this.  The real world stock markets don't care whether or not the positions you hold are doing better/worse than the S&P index.  But here your pick can be in the green despite being down, so long as you're not down as much as you could be using the S&P index as a benchmark average.

My bottom line interpretaion of this:  CAPS wasn't created with bear markets in mind.  It was built around the belief that good stocks/companies always go up long term, with some going up faster/higher than others.  With MF being mostly a "buy and hold" anaylsis/investment strategy site, it stands to reason that CAPS would have been designed around the same primary focus. 

IMHO, it'd still be nice though if some of these practical flaws would be worked out.  The suggestion of their being a separate charm for people with 75% outperform calls is a good idea.  Also, I feel the S&P performance weight measure should be removed.  It makes it too easy to game the system in a market like this and pad your accuracy, increasing your overall score in a manner which has no viability in the real markets.

In a market like this, I'm not even paying attention to people's scores.  All that matters to me right now is the quality of the underlying analysys.  Treat CAPS as a community of similarly confused investors sharing opinions and/or ideas, not as a place to look for a leader whose picks you can follow.  Also, never forget that members here are usually no different than you are.  They are just as likely to be wrong about something as you would be, so take whatever you read here (and anywhere else for that matter) with a grain of salt.

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#7) On March 05, 2009 at 12:17 AM, cbwang888 (25.55) wrote:


How about green thumbing ultrashorts?

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#8) On March 05, 2009 at 3:25 PM, JakilaTheHun (99.93) wrote:

Good post.  I agree.  Of the top 20, there are only a few that I believe would be considered great investors.  Most make their points gaming the system --- not that I have much of an issue with it.  It's just a game and I don't care; just think that others should look at factors other than CAPS ratings to ascertain how good of an investor someone truly is.

If you check out the Soros tracker, I believe it has an "Under 20" rating.  Of course, we don't know the exact timing of his investments so that can throw it off a little bit, but still ... the lesson is that the CAPS rating system is not necessarily a completely accurate indication of one's investing ability. 

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#9) On May 12, 2009 at 9:49 PM, truthisntstupid (78.94) wrote:

So - what's the take-away?  That a large majority of you know-it-alls who run down buy-and-hold don't even invest in real life?  I sure hope that's not true 'cause that's pretty lame.

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#10) On May 12, 2009 at 11:46 PM, AirForceFool (99.86) wrote:

If you look at my CAPS portfolio, you'll certainly find that I've made the majority of my picks with thumbs down. I would argue that knowing how to find a company that you don't want to invest in is just as important as finding one you want to invest in... perhaps even more so. Understanding the fundamentals of a company and realizing that certain debt may be good if it comes with growth etc... is critical to good stock picking... you can pick a great company, but if you aren't aware of the risks that come with that particular company, and don't properly analyze the risk/reward, you'll be with many Americans that lost 40% of their investments only a few short years before they "planned" to retire.

I invest quite a bit in real life, to include options trading... I do game the system in CAPS, closing out picks and re-opening them to bank accuracy... just for fun, I went into my picks to see what percentage of picks I had where green thumbs... with 1277 total picks, I have about 450 that are green... so a little better then one green for every two reds... not to bad...

I don't really mind if folks blindly follow folks regardless of their picks... I just hope that no one buys stocks based on someone's picks without doing their own homework...



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#11) On May 25, 2009 at 10:29 AM, Sace1683 (91.78) wrote:

Please dont look at my picks is all im gonna say(made some horrible ones). I do put my money where my mouth is to a large extent, even though i havent been adding to any pics that ive been buying. I also had the advantage of not being in the market(mostly lack of time) until after the majority of the crash.

Consequently the last 8 months or so in real life investing has been very good to me. I'm new to this website as well as caps, but ive enjoyed this/the opinions of others who are here.

GL to all

nice name AirForceFool :) guess im an AFfool too lol

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#12) On May 30, 2009 at 10:19 AM, ProfitMkers (< 20) wrote:

Hi all...I'm new here in Caps and in the investing world.  Any comments or answers to my post below are MOST welcomed!


Good posts....SO how do we play this market after this big leg up?  I'm currently 100% cash...Having missed out on this terrific rally, from fear of losing another large sum of money like last fall, I am not sure what to do at this point.

(please insert your comment here)


I've been kicking myself lately (real hard too) for not having bought (from pure fear) all these stocks that I was considering owning anyhow, back when they were 1/3 or even 1/5 of where they are now. Do I buy thesestocks now and hope the market will not take another leg down, like many pandits are predicting? or wait for more clear signs of recovery, by which time it may be hard to find good value?

(please insert your comment here)


I hear there's a new wave of foreclosures coming to light and commercial real estate defaults and corporate debt defaults are just in the beginning stage.  GM is bankrupt and closing even more plants.  Also, unemployment is not close to peak yet.  Meanwhile, the market is going up week after week; are investors banking on mere hope that things will improve within the next couple years or so?  Frankly, I don't see people spending more within the next 2 years, just the opposite saving more and pinching pennies.  I don't see people buying cars, RV's, boats, houses or any big ticket items like a few years past.  So how do corporations see profits returning if people won't be buying.  Who will they sell to?

  (please insert your comment here)


Oil is another head scratcher for me.  Supply is way up, demand is way down with no sign of improvement in the horizon, but it just topped $66/barrel today.  Anyone care to tackle this one?

(please insert your comment here) Report this comment
#13) On January 03, 2010 at 12:18 PM, topsecret09 (89.85) wrote:

I am kinda partial to the fools that enter 50 to 100 picks with NO PITCHES just to rack up points...  LOL !!!!!!!    There are people that are very sharp,and the only ones that I pay attention to are the ones that give their rational on why they like or dislike a company.Many of the caps leaders know next to nothing about the companies that they are picking,they just RED or GREEN thumb entire sectors........   TS

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#14) On January 03, 2010 at 12:35 PM, mattskin (< 20) wrote:

I have racked up a decent score quickly on 99% green thumbs.  In fact, two of my worst ever picks were red thumbs (NFLX and AXP?).

I don't really think my score is legit and here is why:

1.  With the recent market run-up, I think it was easy to pick winners by just picking high-beta stocks.  Over the long-term, I think there will be some regression to the mean.

2.  My portfolio does not reflect reality because it assumes I have unlimited capital to pick stocks without paying brokerage fees.  In reality, I have to make decisions and buy only a handful of my picks based on the capitla I have.  My real life buys are never my bext CAPS picks (nor my worst, for that matter).

Still, its fun.

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#15) On January 03, 2010 at 12:45 PM, topsecret09 (89.85) wrote:

#14) On January 03, 2010 at 12:35 PM, mattskin (96.56) wrote:    1.  With the recent market run-up, I think it was easy to pick winners by just picking high-beta stocks  Good point.....  TS

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#16) On January 03, 2010 at 12:46 PM, Teacherman1 (< 20) wrote:

mattskin - How about putting a $ sign next to the ones that are Real Buys.

Your others could be considered ones you are watching.

Just a suggestion.

Or not.

It's strictly up to you, but I would be interested in seeing them. 

Good Luck to all in 2010.

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