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|Subject: Re: CAPS is not meant to be a mirror of performa||Date: 2/13/2007 5:38 PM|
|Author: albaby1||Number: 4885 of 8047|
As you may or may not know, "Score" represents aggregated percentage points of incremental outperformance of the S&P 500 by the picks made on those scorecards. There is growing evidence even at this early stage that our Motley Fool community intelligence, highlighted here on CAPS, can provide second opinions that help you beat the market.
What type of evidence are you referring to, David? I'm curious whether any internal tracking of ratings vs. performance has panned out.
I'm not sure how much those four user-created indices tell you. The CAPS5Star1Star is defunct - the little "bomb" icon indicates that the poster gave up on the portfolio at least 90 days ago. There hasn't been a transaction since October, so no rebalancing. Half the picks don't meet the criteria any more.
The "small cap" index doesn't tell you anything unless you measure it against a small cap benchmark (small caps outperformed the market in general in Q4 2006, so you can't conclude that 5star small caps outperformed 1star small caps during that time frame).
The 5Star and 1Star indices have high scores and high ratings, but at this early stage you can't tell whether that's because they are really measuring anything significant or whether that's an artifact of the large numbers of picks they make - their average scores are less than a point difference from the median CAPS player, and they've both trailed and exceeded the markets at early stages in their young lives.
Moreover, all the player created indices are limited to 200 active picks, so none of them provide any accurate information about the universe of CAPS stocks in a particular rating.
Is there some internal tracking that's showing CAPS as a useful predictor of performance?
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