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?
Hi David;Great post by the way. But I have to ask, and please keep in mind that I mean no disrespect to you or to Fooldom, but, is CAPS going to eventually become "for pay"?I used to hang out on the Foolish Collective board and when Fooldom moved to newsletters, and I understand the reason why that was done, one of the things that was done was the creation of a "private" discussion board set up just for subscribers of a particular Foolish newsletter.I complained that eventually there wouldn't be much left of the Foolish Collective board because it would simply become the Inside Value board. To some extent, that's what happened.I did subscribe to Inside Value, and cancelled my subscription the same day, finding that I'm not your target market for Inside Value.Back to CAPS. Is what happened with the newsletters going to happen to CAPS?Fooldom has invested a lot of time, effort, and money in setting up CAPS, (and it shows by the way) but if the newsletters are any indication, all of this wasn't done without some hope of a return on investment.The reason for my question is simple. CAPS is fun, but it isn't so much fun that I personally would be willing to pay for it. So if it's going to become something I have to pay for, in addition to the $29.95 cover charge, then I would appreciate knowing that...up front so to speak.Wax
No doubt about it......CAPs is almost the greatest invention since chopped liver. It will be THE GREATEST once the CAPs team includes DIVIDENDS in the calculations. Over the long term, DIVIDENDS often make up the major part of the TOTAL RETURN for many stocks.......Missash, beating a dead horse?
Missash, beating a dead horse? Yes... But you are right. Dividends have to be included to get a true total return figure.
I've identified 14 Ways to use the CAPS Swiss Army Knife -- want to help me on #15-#20 and beyond?#15 - trading friendly taunts and jabs with your fellow CAPS players!Regards,Russell
#16 - companies can see how the best investors perceive themI think that CAPS has long term value for the management of companies that are rated in it. If I ran a small public company and a slew of thethe best CAPS investors said that my company would outperform, thiswould be good. But if a slew give it an underperform I would want toread the pitches and see if I could understand the problems and seehow to fix them. Feedback is always good and an informed outside opinion would do many businesses a world of good. (Vonage, I'm looking at YOU!)Chris - CAPS is more fun legos, and that is high praise indeed!
The CAPS Swiss Army Knife - Beginning Applications of CAPS Here is a beginner's guide with specific applications of CAPS. Hopefully this will get your creative juices flowing on the range of possible applications. All of these probably fall within the scope of David's first 5 reasons – a learning tool, a factory for new stock ideas, a second opinion on stocks, tracking investors, and tracking wall street. Many of you are probably already expert users and have found more complex, nuanced ways of conducting research through CAPS. For begginers and those just getting their feet wet, dive in! How can CAPS help me conduct stock research? I am lazy. Boil all of this analysis down to something simple and straightforward. Check out the CAPS one-to-five star rating on any stock of interest located at the top of the page right below the company name. Who do you take me for? I'm not that lazy. Give me the overall quantitative data behind all the picks on this stock. Give me the juice behind the CAPS Rating. Under “What the Community Thinks” check out the total number of outperform and underperform picks on the stock. Note the division of picks among all-stars as well. Okay, okay. So these are the raw numbers. But what about recent sentiment on the stock given its current price? What's the current outlook moving forward? Within the scorecard view, see the most recent picks on the stock. The default sort of the scorecard view is by start date so ticker pages will naturally show the most recent picks. Read the commentary by expanding the pitches. Be sure to take note of the player ratings of these picks as well. What if I just want to see what the highest rated people think about this stock? Show me the opinions of the CAPS experts. Click on the header of the second column – Player Rating. This will sort all of the picks by player rating. From top to bottom, you will have the calls of the top-rated players in CAPS. Take note of the relative distribution of green thumbs and red thumbs and be sure to read the pitches. Okay. Forget the overall experts. I want to see the calls of people who have already been right on this stock. Show me the experts on this stock alone. In the second-to-last column, click on the Score header to sort all of the picks on score. This custom list shows you the picks of people who have been right the most on this stock. They had the best performing calls to date. See if they are thumbs up or thumbs down and read their pitches. What if I want to read the best commentary on this stock? Show me the highest-rated pitches. Next to the scorecard tab, click the commentary tab. To the right of Sort by, click the “Recs” link to sort all of the pitches by the number of recommendations. The highest ones will bubble to the top and you can read away. Be sure to note whether they are a green-thumbs-up or a red-thumbs-down. Read the replies as well. I'm a long-term investor. I want to know what people are thinking 5-10 years out. Within the scorecard tab, click on the “Time Frame” column. The second click will give you picks sorted by the longest time frame. As always, be sure to check player ratings, start prices, and the accumulated score – as well as read the pitches. I'm just about sold on this stock. I'm ready to make the pick myself – and also buy it in my portfolio. But, being the prudent person I am, I want to be thorough in my analysis. I want to see the opinions of everyone who disagrees with me. Show me what these people think. Within the scorecard tab, click on the header of the fourth column – “Call.” The first click will give you all the outperforms; the second click all the underperforms. With all the underperforms at the top, you can see what players (with what player ratings…) are thumbs-down on your stock of choice and you can read their commentary by expanding the pitches. Forget about the CAPS players. Show me the opinions of the real experts – the professionals. Below the CAPS Players table is a Wall Street table with the aggregated picks of professional analysts. Mine this data just as you would the data of the CAPS players. Say I find some stocks of interest. I want to check out other similar stocks that I might want to buy. CAPS provides 2 neat applications here.1) On any ticker page, under “What the Community Thinks” you can see what players bullish/bearish on this stock are also bullish/bearish on. 2) Below that, click on any tag associated with this ticker and see what other stocks belong to this category. Be sure to note the performance of that entire tag on daily, monthly, and yearly time frames. I hate stocks. What about people? How can I follow and learn from great investors? I'm on a player page. What should I do? At the top of the table, check out the player's most recent picks and any associated pitches. Without being overly redundant, here are ways to sort the data in the player's scorecard:1) Sort on CAPS Rating – see the person's opinions on 1-star stocks and 5-star stocks. Read associated commentary.2) Sort on time frame – see the person's short-term and long-term outlook. Read associated commentary.3) Sort both ways on score – see what the player has been the most right and wrong about. Read associated commentary. 4) Within commentary view, sort on “Recs.” Read what the community believes to be the highest quality pitches from this person. Okay. How can I easily track my favorite players. There are so many players within CAPS already and I just want to follow a few select players of interest. That's what favorites are for. On your player page, within the Favorites tab, you will notice a link at the top entitled “View All Favorites.” This will bring you a nifty table listing all your favorites and important data points for your favorites. In the short-term, we also plan on beefing up this table by making these columns sortable and adding a few important columns. In the meantime, this page is the best way to keep track of all your favorites and see how they are doing on a daily basis. I hate stocks and people. What about overall statistics? Our Top Tens tab hosts a wide range of data on all aspects of CAPS. This information can be mined in a number of different ways, but just to get your creative juices flowing, I will make a few points: 1) Disappointing 5-star stocks: Note 5-star stocks that have performed poorly. Is there a reason for the poor stock performance? Or has the sell-off occurred for no reason? What are CAPS players saying now given the sell-off? Check the most recent picks and commentary on the stocks at the top of this list. 2) Most rated stocks: Among these stocks with the most picks, check for which ones have high CAPS ratings – 4 or 5 stars. These are stocks that a large portion of the community thinks will outperform. 3) Newly starred stocks: Moving forward, these will represent stocks with minimal coverage among investors and Wall Street. You get to take a look at what the opinions and commentary on these stocks are when less than 20 people have picks on them. Generally speaking, the less coverage on a stock, the greater potential for it to be misvalued. Research hidden investment opportunities among 5-star stocks within this list. In addition to highlighting interesting data, the top ten lists provide users with a great way of identifying new favorite players to follow. Forget about stocks, people and statistics. I want to produce my own customizable listings based on my preferences. What about advanced stock and player search? Some of the most powerful ways to use CAPS are through customizable, advanced player and stock searches. The possibilities here are truly endless – and with time, we hope to beef up the searching capabilities even further; although in their current state, I think they provide a great window into the CAPS universe of data. A few quick examples to illustrate the potential here…Where else can you do a search for an investor who is beating the market by more than 100 score points (percentage points) with an accuracy between 80% and 100% and a high risk tolerance? As of now, only 6 such players exist out of over 11,000 investors – mpfd33, Graylord, TMFPeterJ, jtallenmd, HornedToad10 and sisyphus123. Amazingly, the same search with the small tweak of switching high risk tolerance to low risk tolerance produces 11 investors. Or how about finding a 5-star stock with more than 80 picks that is down over 20% in the last month….Only 2 such stocks exist – LCAV and ASPV. These are just a few possible searches among an infinite number of possibilities. Without CAPS, I'm not sure how one would even begin conducting these sorts of searches. Conclusion As you can see, the data within CAPS can be mined in a myriad of different ways. Whatever your personal investing profile, jump into this research platform and make it work for you. And continue sharing and discussing application ideas in this thread. Investors helping investors beat the market – Fools living the mission.
"#16 - companies can see how the best investors perceive them"Oh VERY nice one. I was also thinking about the Wall St. analysts in a similar regard earlier. IF they care (which they might or might not), think how cool it could be to have an annual "CAPPY" award for "Best Wall St. Analyst Stock Picker"? That kind of headline might even hit a few financial pubs, who knows?If you take this to its logical conclusion, CAPS is (in part) a metric by which Wall St. analysts (who do this for a living) are JUDGED and MEASURED, in the open, for all to see. As far as I know, NOTHING like that has been available before. As I mentioned in a previous post, what ROTH has done to date has me completely floored, and changed my tune which used to be to stereotype "all Wall Street types" as "bad" or crooked.Great, great stuff imo.Again, congrats to CAPS team on an incredible "thing".
Beyond Community Intelligence There has been a lot of talk on the value of community intelligence. I am certainly a believer; seduced by “The Wisdom of Crowds” philosophy and the overwhelming success of wikipedia and Google search, among other things, I am a firm believer. But the following thought has recently hit me – even if community intelligence were for some reason flawed, I think CAPS would still be incredibly valuable. I think there are great uses of CAPS for people who aren't seduced by the notion of community intelligence. The transparent interface of CAPS makes the scope of the platform far broader. Call me biased here, but I don't think the success of CAPS rides on the merits of community intelligence. Fundamentally, CAPS is a research tool that anyone can mine – even if we are all asking different questions, CAPS gives us the data to arrive at meaningful answers. How could the data be harnessed, let alone analyzed, before CAPS? What's your profile? How are you using CAPS? Applications of CAPS by Individual Profiles Simple Believer Profile : I believe in community intelligence and CAPS but am not interested in doing comprehensive stock research. I want simple, easy-to-understand research results.Simple Believer Applications: • CAPS stock ratings• Recent picks of top-rated players• Players bullish/bearish on XXX are also bullish/bearish on YYYAdvanced Believer Profile: I am a strong believer in community intelligence and CAPS and want to milk it for all it's worth. Advanced Believer Applications: • Advanced customizable searches• Top tens lists• Scorecard sorts• Recent picks of my favorite players Non-Believer Profile: I don't buy the whole community intelligence thing. I want expert opinions. Non-Believer Applications: • Research poorly rated 1-star stocks as contrary indicator investment opportunities.• Identify areas of overwhelming outperform/underperform concensus as contrary indicators. • Follow the track wall street players• Follow the highest rated investors and investors of interest
Talk about a FREE marketing campaign for the good Wall Street companies.
I'd like to add another neat tool, which David kinda touched upon with #3. It really covers the long tail of the stock market, and brings some of the more disgusting companies to light.Case in point - IIG, PRZ, XNL and UTK to name a few. Both IIG and PRZ are only covered by 1 analyst each, and XNL and UTK are not covered at all. I believe this is in part due to the fact the Wall Street is loath to cover poorly run small cap companies, because they don't want to issue sell ratings etc and it is not worth the time and effort too. However, this leaves a massive information gap that allows unethical management to exploit with no-one to call them out on it. Thusly individual investors who may not know any better fall for the party line, and buy into the company only to be rewarded with massive losses. Seriously, have you seen some of the Yahoo! boards after some of the more massive drops? Many of them do not have a clue about managements' background etc. However on CAPS, they are covered by anywhere from 16 to 70 plus Fools. Fools can step in to cover the gap, and hopefully providing a shining light of sorts on these unethical companies. Investors who previously would have not known any better can find out the real deal. For me, I await the day when the WSJ runs a article about some small company that is not covered by Wall Street, and includes a CAPS pitch because CAPS is the only playground where an skilled opinion is available on the company. Wouldn't that be cool?Steve
Steve,Very much agreed on your point. Very much. Read my Pitch on EEE on my scorecard to see my own basic approach to finding these. Before CAPS, I was oblivious. Among many of the tremendous effects that I hope CAPS has on the investment world will be (tracking and rating Wall Street as one such example), I hope that the discovery of really really bad or even fraudulent companies or corporate execs will stand tall and proud right there. I think CAPS does this to the nth degree, and is already partially delivering on that. --David
"It really covers the long tail of the stock market, and brings some of the more disgusting companies to light.Case in point - IIG, PRZ, XNL and UTK to name a few. "I note that of the stocks you mention XNL and UTK were targeted by www.sharesleuth.comAnd IIG was targeted by www.stocklemon.com Both sites make money by shorting and then generating negative publicity for the stocks they target.I suspect this bashing affects the low CAPS ratings for these stocks and one should be careful before using a low CAPS rating to go short. For example it has recently come to light that at least some of the negative publicity generated by stocklemon.com regarding IIG is suspect. http://www.ripoffreport.com/reports/ripoff218805.htmI'd be looking at a low CAPS rating as a possible sign of hysterical negativity surrounding a stock highlighting a buying opportunity.Regards MK(long on IIG)
Is there a way for me to just ask the community a question about the stock without picking? Or is there another post?
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