CAPS: Investor's Swiss Army KnifeCAPS is a service, a game, a platform, a home, shared fun with friends, a contest, a revolution. I've heard all these words to describe CAPS from our customers already, and others besides. It's already amply clear that we share some affinities with the old Dan Aykroyd Saturday Night Live “It's a Dessert Topping! It's a Floor Wax!” (http://snltranscripts.jt.org/75/75ishimmer.phtml). CAPS shimmers with manifold features and reasons to visit, watch, participate. Because I think of CAPS more than anything as a tool, I have come to think of it as “a Swiss Army Knife for investors.” To that end, I wanted to list some of the gadgets and gizmos that our Swiss Army knife offers.Before you look over the list below, please note that I believe that CAPS is a worthy tool, a worthy regular click for investors, for any single one of the reasons contained herein. And yet I believe it does all of the following, effectively. Not every investor will have every reason below to use it, but I believe we are in the process of building together something that is very valuable and very useful for ALL 14 -- and counting -- of the following reasons. Choose your favorites:#1: A learning tool "companion for life." The Fools who so far have embraced CAPS the most are those who recognize that it is a tremendous home base for learning. With CAPS you now can -- and should -- write notes to yourself as to WHY you are picking any stock, WHY you are selling, etc. etc. -- what we've been teaching people to do over the years on a yellow legal pad can now be done in a permanent home online repository. Not only that, but multiply this usefulness by thousands; CAPS is housing not only all your own actions and reasoning over the months and years, but that of many thousands of others. Almost nothing else I can write below holds a candle to the value of this single reason. (Students of the game may enjoy checking out the new “Lessons from CAPS” board: http://boards.fool.com/Messages.asp?bid=117988.)#2: A factory of new stock ideas. Investors have been pointing out to us for months and, internally, years that CAPS helps them find new stocks they never knew about. As it continues to happen for me on a daily basis, and as I've been using CAPS for two years now myself, I can tell you that this concept has serious legs. Whether it's a compelling investment rationale popping up in the Buzzbox, whether it's a ticker symbol I don't recognize on the Player Page of a highly rated investor, etc., I am constantly deepening my awareness and knowledge of what's going on in business and the stock market.#3: A second opinion for any stock you're investigating. Based on my own observations over the past few decades -- paraphrasing words from Thoreau -- “most investors lead lives of quiet desperation.” They typically get their stock picks from one source: their broker, something they read that someone said in some magazine, or from their Uncle Bob -- though they can't even verify Uncle Bob's historic returns or the value of his advice. By giving you the Long Tail view of the stock market -- with already over 2000 stocks rated at this early stage -- CAPS is there as a sounding board, or second opinion -- for anyone who is investigating any stock they hear about. Again, one-third of all stocks in America have zero -- zip, zilch, nada -- analysts covering them, and therefore there has been, pre-CAPS, very little information or perspective to be had on these companies. Whichever stock we're talking about, you can now tap directly into CAPS for free and -- beyond just our star rating -- drill down right into the colored thumbs, the commentaries, the information and perspective -- backed by people actively taking a stand one way or the other -- on the security of interest to you. Investors who've found CAPS will no longer lead lives of quiet desperation....#4: Track some pretty darn good investors. Speaking of those investors whose pages I'm browsing, whose pages serve as a repository for all they think and do as investors, boy there are some very good ones. Even operating off less than a year full of data, I can already find people who match my own approach, or take a radically different approach, and I can see their favorite ideas, their most recent actions, their rationale -- I can find people who are right a high percentage of the time, or have a knack in a certain industry, and I can follow them. When could I do that before in anything like this depth and detail?#5: Track Wall Street. CAPS tracks the buy and sell advice of Wall Street firms all in one place, for the first time surrounded by all of us. Thanks to CAPS, that proverbial “anal-yst” people complain about on discussion boards from time to time is being held accountable for every single future recommendation made -- tracked, rated, ranked, scored. “We're listening.” For now on, everything counts. Before CAPS, you may have wondered how reliable it was to follow Jim Cramer's TV advice. Before CAPS, the analysis of Bear Stearns, or Bank of America, had no implications to me, no differentiation among their generic-sounding financial brands. Now thanks to CAPS, I sit up and pay attention to one, and am tempted specifically to go contrary the other. (Don't know which? Check it out. Check out ALL Wall Street tracking: Do a Player Search starting with the prefix "Track" -- you'll find them.) We've now seen enough eyes light up as we pitched this aspect of CAPS in dozens of corporate business settings to believe #5 here is pretty special.#6: Fun with friends. Where else can you check in on your friends' portfolios, favorite and least favorite stocks, and by extension, their investment minds? Before CAPS, I couldn't "see" what my dad was thinking about as an investor -- what stocks he favored now, and WHY. Now I can check in any time I like -- and do. And our family phone calls have a new extra dimension of understanding and fun. My list of favorites contains a few dozen online Fool friends as well, all marked "Favorite" and in one convenient place for me to check in on every day. Do this yourself: If you have selected one or more CAPS participants previously as a Favorite, go to your My CAPS page, and under the FAVORITES tab in the upper-left notice the rather hidden (at present) "Display All Favorites" link. Hit that -- see what happens. From TMF1000 to pencils2, I have 35 Favorites already, and counting....#7: A place you, and everyone, can point to. Every present action taken on CAPS is public, documented, archived, accessible. Want to prove anything? Want to prove to any external third party that you DID in fact say that Vonage would be a bad stock or that “you've been consistently right about Google,” or want to check on some Wall Street analyst's call to see what he/she said the call before this one? A public showing in the light of day of every prognostication you've made on stocks, or others have made -- a platform that serves as home to that -- is useful in many ways, not the least of which is the powerful aspect that you can now point to the “statuary” of your own actions and show people the marmoreal day and price of your predictions. And yes, investment professionals are taking notice. On October 5th of this year, we received the first such declaration from a professional money manager, who writes, "Although I would argue that your site competes in various ways with my portfolio management business, I have to say that your CAPS program is brilliant. There is no way for a person in my business to become established and to show (unless I am a mutual fund) proven records of a winning strategy. We get buried under headlines and God Forbid we are wrong. So, thank you. You just became my number one resource for stocks."#8: A showcase and testing ground for every different investment approach. Already in our Top Ten you see investors who are trading in and out of the market, and people who sit patiently on just a dozen or so stocks, but are "almost always right." It'll be fascinating to see how these different approaches play out versus each other over time. In the meantime, it's already clear that every approach has something to offer, and CAPS is showing that it's more about following and learning from and practicing AN approach well, than just one single “best” approach. CAPS is a tremendous fishbowl that will be of fascination to academia, as well.#9: A portfolio or watchlist tracker. In the midst of the grandiose, let us not lose sight of the mundane. Type your portfolio into CAPS and come back each day to see how your stocks did, to enjoy others' commentary on your stocks, and if you care, to follow how our community is ranking your stocks, and how those rankings may be changing. Or look how Steve Ellis put it, recently: “As an investor... I review many companies weekly, and often dismiss them for one reason or another, and never look at them again. Well, now I can pick them for underperform, leave a note to myself via a pitch on my initial sentiments, and forget about it until six months later, when it blows up or skyrockets. I can then review my initial thesis, and know exactly what to focus on when I review the company again, rather than re-start everything from scratch. I can also enter all of the companies that I really like and think will outperform the market, but not my current holdings, and can monitor in real time if I made the right decision.” Plus, just wait till we offer watchlists, and alerts....#10: Compete with friends. Invite in a friend -- a buddy from work, your sister, your golfing partners. Pick some stocks, talk some trash. We'll build out this feature more extensively in future, but for now you can have quite a lot of fun inviting in people near and dear to you and in some neat new ways, learn together: http://www.fool.com/Community/Mission.htm#11: A contest platform. Are you one of the 899 people who've joined our first contest via the Contests tab? You're beating me, are you? :) These will all be fun. There will be many more. #12: Early read on IPOs. It normally takes weeks or months for the first brokerage coverage of newly IPO'd stocks to show up... and then, it's usually a buy report coming from -- surprise, surprise -- the underwriter. In CAPS, we're starting to see new IPOs fully rated and ranked as early as the first day of that IPO. The opportunity to see thumbs up or thumbs down from some very talented investors on Day One for new IPOs is just one cool extra feature of CAPS.#13: Teach your kids. I have had my daughter participating in CAPS alpha and beta for nearly two years now, and she has learned a tremendous amount about American business and the stock market. The fun of having your kids “grow up on CAPS” and take actions, rate stocks, enjoy the fun of following these and learning -- I just don't know of anything like it. I would have absolutely loved CAPS as a boy. I'm so glad I'll be able to share, and teach, stocks to my kids via CAPS. They're a lot more interested in CAPS than they were in “dad's newsletter thingie.”#14: Maybe even, in some form, a predictive tool. I've saved this for last, and think I could have omitted it outright. I can't say for sure whether or not -- or in what circumstances -- CAPS will be predictive. And even if then it were publicly perceived and lauded to be predictive, would that then undermine its future predictive power? :) We can't know. I think it'll be really interesting once two years have passed to begin seeing whether CAPS was predictive, but we did not build the site hoping we were building a magic wand. As you can see from my other 13 reasons above, I believe CAPS is a tremendously compelling and useful tool for investors for more than a dozen reasons. If it also proves predictive, well, it would be the first “money machine” of its kind, and then as a businessman I'd be seeking to automate it! And if it is not predictive, if it ends up being a contrary indicator, even, would that not in and of itself be valuable, and useful to follow? ;)(For those interested in "seeing how CAPS is doing" by one count, at least, a Motley Fool member has created a 200-stock scorecard which he intends as a CAPS index. It contains 150 5-star stocks rated to Outperform, and 50 1-star stocks rated to Underperform, and is rebalanced periodically by his dictates. That scorecard is CAPS5star1star and is at: http://caps.fool.com/ViewPlayer.aspx?t=01007999450359615993. He also runs an amusing daily recap at: http://boards.fool.com/Messages.asp?bid=117958.) To close, I hope that any reader has identified at least one compelling reason above to make CAPS a daily or a weekly click, and something you can recommend to all the investors, kids, co-workers, and friends in your life. At least one reason. For me, every single reason stated above personally applies. I flip out different gadgets off this investor's Swiss Army knife every day, and it's my pleasure to continue to discover -- and create -- new and exciting additional ways to use CAPS.Fool on,DavidP.S. In fact, I already can think of uses for CAPS not listed above. Further, I have in mind at least a dozen additional uses of CAPS in future once we here at Fool HQ begin to build out more of the blueprints in our heads. P.P.S. These things said, I encourage anyone to reply to this thread with additional uses or benefits of CAPS that they would recommend to others, so we can keep building our list. I've identified 14 Ways to use the CAPS Swiss Army Knife -- want to help me on #15-#20 and beyond?
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