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To CAPS Management: Please add a trading volume minimum requirement!

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May 29, 2009 – Comments (18) | RELATED TICKERS: VO , ME.DL2

I don't think I need to go into a big explanation on this one.  The single best thing that could be done to prevent gaming of the caps system is to add a volume requirement to the pickability thresholds.  This would eliminate a lot of .ob and .pk stock picks right away.  If you're a caps gamer, you know that you can bank accuracy and points simply by continually picking very illiquid stocks -- If a stock has a bid/ask of $1.70/$1.85 and it trades 100 shares at $1.85, redthumb it and wait until it trades at the bid of $1.70 to close it.  And then greenthumb it and wait until someone buys 100 shares at $1.85 to close it again.  Lather, rinse, repeat.  This has zero actual investing value with real money, course, so it should not be part of the caps game.

Come on, CAPS.  This need is sooo obvious.

18 Comments – Post Your Own

#1) On May 29, 2009 at 12:10 PM, JTShideler (79.70) wrote:

Isn't that partly corrected by the 7 day minimum requirement to close a pick?  Playing the bid ask is a decent trader's play but don't see it as a problem when it takes seven days before you can close your call out.

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#2) On May 29, 2009 at 12:14 PM, MustBNuts (31.19) wrote:

Great use of the tickers.  I've experienced problems with the process you described.  I've had my pick "filled" at the "wrong" price so I can't easily play that game.  The new limit order feature will help (if you decide to play that way).

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#3) On May 29, 2009 at 12:18 PM, portefeuille (99.59) wrote:

This would eliminate a lot of .ob and .pk stock picks right away.

If you do that please add some non-U.S. exchanges like London, Frankfurt, Tokyo, Toronto though ...

It would also do away with the front running issue (see this post!).

 

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#4) On May 29, 2009 at 12:19 PM, AllStarPortfolio (23.54) wrote:

And make the 'preview post' refresh back to the bottom for god sakes.

And my new idea, A 'skeleton charm for folks who haven't signed in for a year!

Nor really, what SpecBear said.

-solaris

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#5) On May 29, 2009 at 12:20 PM, portefeuille (99.59) wrote:

It would also do away with the front running issue (see this post!).

or at least ameliorate it ...

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#6) On May 29, 2009 at 12:32 PM, nottheSEC (80.16) wrote:

I respectfully disagee and present my humble opinion. One of the idea of caps is hidden gems or promiosing small caps.Sucess in an unwanted stock with good fundamentals that analyst are not following and is too small to buy by institutions which often leads to small volume. Also as Portefeuille says it would eliminate most .OB and .PK's.IMHO While most do indeed deserve to be eliminated there are 5-10% with promise. Also as Jt put it the seven day wait takes care of that. I have personally had stocks that have stood unpicked because there was zero volume. All best...J

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#7) On May 29, 2009 at 12:41 PM, bridgeboy0 (30.87) wrote:

I think this is a fantastic idea and I had already sent a comment about it.  Hopefully this will get it more attention!

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#8) On May 29, 2009 at 1:06 PM, Option1307 (29.72) wrote:

What about the fact that people can use Caps as a sort of warning when researching smaller cap stocks/.ob/.pk.

Maybe you are thinking of investing in some tiny .ob that has the newest "breakout drug", yet the mjaority of Caps members rate it as a scam and thus you do more DD. Does this not have value?

While I don't persoanlly touch .ob/.pk stocks in RL, I think this rational still holds true fo many people.

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#9) On May 29, 2009 at 1:08 PM, JakilaTheHun (99.94) wrote:

I'd support this if they would lower the market cap minimum.

I can't see any reason why I can't make a pick on a regularly traded microcap with a market cap of $60 million that trades on a major American exchange (NYSE, Nasdaq, AMEX) --- but I can make a pick on some obscure .OB or .PK stock with virtually no volume that manages to climb its way over the $100 million threshold (in many cases through nothing more than pumping).  Just seems like the Fool has this aspect of CAPS backwards.  We miss out on a lot of great microcaps but allow picks on a lot of garbage stocks.  :-/

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#10) On May 29, 2009 at 1:20 PM, portefeuille (99.59) wrote:

make a list!

 

... like this one that can accommodate the "not currently ratable" stuff, the "foreign stuff", "Hi Mom!!" messages (see comment #503 here) and much more! it is fun!! really!!!

(and it can be a "hit". read this ...)

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#11) On May 29, 2009 at 1:27 PM, jstegma (29.19) wrote:

I agree that there should be minimum volume requirements on a pickable ticker.  The point of the game really shouldn't be to dig up the most obscure .OB trash stocks no one has heard of or cares about and short them.  Obviously this is a skill, but it really isn't the point of the game. 

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#12) On May 29, 2009 at 1:39 PM, portefeuille (99.59) wrote:

The point of the game really shouldn't be to dig up the most obscure .OB trash stocks no one has heard of or cares about and short them.

The thing is that

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

(from here)

and they might lose them if they took away their OB/PK toys ...

 

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#13) On May 29, 2009 at 6:58 PM, tonylogan1 (27.87) wrote:

The volume level does not even have to be that high.. but you shoud not get 80 caps points on a stock that traded a total of $120 of stock on a given day.. That is rediculous and will get worse with the new limit orders system.

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#14) On May 30, 2009 at 12:23 AM, Tastylunch (29.22) wrote:

I agree with thehuney err I guess it's JakilaTheHun now.

I think a volume request is reasonable especially given the bid/ask issues it presents. I suppose I could be considered a gamer in CAPS so this I guess could hurt me by whatever makes the game better is fine by me. I only redthumb trash to keep other people out of it in rl and for the sheer comedic value of those POS stocks.

However like jakila said legit stocks with small market caps should be tradeable , after all some of the best deep value investments are sub 100 mkt cap stocks.

 

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#15) On May 30, 2009 at 8:53 PM, TMFJake (77.35) wrote:

StatsGeek, thanks for the suggestion.  We are testing some changes to the CAPS rating algortithm presently and will consider this proposal.  Best, jk

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#16) On June 10, 2009 at 2:30 PM, rexlove (99.43) wrote:

I've been asking for this for a long time. I wish they would eliminate all OTC and pink sheet stocks altogether. It's un-realistic and wouldn't fly in the real world. I think it would also reveal who are some of the real stock pickers in this game.

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#17) On June 23, 2009 at 12:57 PM, georcole (67.72) wrote:

StatsGeek,

    I agree that volume requirements are a great idea, I simply question why you would pick such picks yourself if you are against them. That seems to take a little sting out of your argument. I hope they do eliminate such picks,  because as rexlove said, "it would also reveal who are some of the real stock pickers". Best of luck, and may we see your name at the top of the list soon.

                      George

     

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#18) On June 23, 2009 at 5:57 PM, TigerPackFund (< 20) wrote:

StatsGeek- 

I hope you can participate in the new "collective" picking system portfolio we have devised for a small group of Top CAPS members.  Click below to read the blog under the new TigerPackFund member name explaining our effort: 

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=215551&t=01008389776301665428

We could absolutely use your smarts and experience to generate a higher return for readers.

We are basically asking you to pick up to 5 stocks at time, under the normal CAPS rules and scoring system.  Our goal is to find a solid group of 40 members who have proven themselves already, to be our regular contributing stock pickers.

-TigerPack

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