dwot (99.54)

Tip for Maximizing Your Caps Score

September 12, 2007 – Comments (4)

Everyone on here is playing CAPS with criteria to themselves.  Some play to mimic their portfolios, some to experiment with things they would not touch normally, some to prove a point, but all different.

CAPS has very different rules than what you can do in real life with investments and the scoring hardly represents real life, how ever, the scoring is the rating system here and there are a couple things that I am sure the inventors never intended for their game that can improve your score.

Currently 1/3rd is from accuracy and 2/3rds is from points.

I do a lot of underperform calls and I close them once I'm sure I will get at least 5%, which enables it to be counted, and I set another underperform call.  Here's why I close them.  Say you have a 1 billion market cap company with shares for $20, and you think it is going bankrupt.  Put one underperform and when it goes to zero you get 100% plus or minus whatever the S&P does.

By reseting it, say with every dollar decline you get 5% when it goes to $19.  You get 5.3% when it goes to 18, 5.6% to $17, 5.9% to 16, 6.3% to 15, 6.7% to 14, 7.1% to 13, 7.7% to 12, 8.3% to 11, 9.1% to 10, 10% to 9, 11.1% to 8, 12.5% to 7, 14.35 to 6, 16.7% to 5, 20% to 4, 25% to 3, 33% to 2, 50% to 1 and 100% to zero, and the total is about 359%.  I'm not sure, but I think you would also manage to get the same stock count as 20 in your accuracy.

Once you have a lot of points you don't move much because the point spread between players increases quite a bit.

Never do this for stocks that you have outperform ratings.  Say you start with a $5 stock, you get 100% when it gets to $10, and another 100% when it gets to $15, and so on.  If you reset at $10, you'd only be at 50% at $15.

The underperform tip can work strongly against you if you are wrong.  Lets say your $20 stock goes to $10 and you got an extra 17% with the method, 67% instead of 50%.  Now, a buyout for $20/share comes and you had just reset to $10.  Well, now you've lost 100% for a net loss of 33%, yet this stock is at the same price you started at.

Another point on reseting the down stocks, you can't reset them if they go below $100 million and instead you will turn off an underperform call that you can't reset. 

So, I play for a variety of reasons, and one is for score.