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URL:  http://boards.fool.com/because-caps-is-trying-to-measure-the-ability-to-25148551.aspx

Subject:  Re: CAPS is not meant to be a mirror of performa Date:  2/8/2007  4:46 PM
Author:  shayeg Number:  4846 of 8093

because CAPS is trying to measure the ability to pick outperforming stocks, not the ability to construct an outperforming portfolio.

Really? CAPS does NOT measure the ability to pick outperforming stocks over a period of time. Only the ability to pick stocks that outperform CURRENTLY. What is not taken into account is the person's prediction. The stock is weighted by its current performance only. If someone predicts that the stock will outperfom in 6 months time, no credit is given if it actually comes true. If someone predicts that a stock will outperform and closes the stock when it goes bad, no points are taken off for premature closing.

How does that account for "ability to pick outperfoming stocks"? Most Fools are not in the market as "day traders". I would think that some second rating should be made for members whose predictions come true at the end of the term. Whether you are "beating the market today" or not should be irrelevant to the "ability to pick outperforming stocks".

Another factor - I don't know how to measure - is the ability to outperform from today forward. For example, Foolish Company (FOOL) was predicted to outperform the market in January 2007 by the end of the year. In february, some news sent the stock soaring 50%. The rest of the year it stayed at 50%. At the end of the year it will have outperformed the market; but from March to the end of the year it did not. Of what value is the prediction from January to someone looking at CAPS in March?


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