The Cost of CAPS
I have been a CAPS player since September 2006. At the moment I'm ranked 173 out of 30,129 players. For someone like me, I think that's a pretty fair achievement.
But like many things in life, I often tend to look around to see what other folks with the same interests, in this case stock selection, are doing that's making them more successful than I am. I mean if I'm ranked 173, then there must be 172 folks that are playing the stock selection game better than I am.
So thinking, the goal was to look at the most successful CAPS players to see what they were doing, in hopes of improving my overall CAPS score. Some of what I found I already knew, the CAPS leaders pick lots and lots of stocks.
But some of what I realized, I had never considered before, and it made me reconsider my own ranking when compared to the current CAPS leaders.
For instance I looked at the 12 highest rated CAPS players. On average, those 12 players have 169 active stock picks, while I have 23.
Those 12 CAPS leaders have ended, on average, 357 stock picks, while I've ended 4.
But here's the part I hadn't really considered, and it's something that CAPS doesn't allow for. The top 12 CAPS leaders have paid $7019.85 in trading costs, assuming an average of $7.95 per trade, while I've paid $246.45.
Yes I know, it's a game, and I understand it's a game just like I understand that everybody wants a place they can practice whatever it is that enjoy doing, whether it's snowboarding, BASE jumping, needlepoint, whatever. I get it.
I also get that eventually we play just like we practice, so if we practice with a bad habit, eventually we're gonna play with a bad habit. And while that bad habit may not be a big deal in shuffleboard, it could be a very big deal in skydiving.
And so I wonder about the new CAPS players, and/or those new to investing, that may be trying out different investment strategies. Have these players considered that in reality there is a cost associated with trading stocks, a cost of CAPS?
In my case, I can look forward to trade commissions of $182.85 on my 23 stocks and since the stocks I'm playing in CAPS are the same stocks I own in my real life portfolio, I'm not to concerned about trade commissions.
But the leading 12 CAPS players get to look forward to trade commissions of $1343.55 to end the average 169 active stocks they hold, and since I sort of doubt these folk invest in the real world the same way they play CAPS, I have to ask if these folks have considered the cost of CAPS, bad habits and all.