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|Subject: Re: CAPS is not meant to be a mirror of performa||Date: 2/13/2007 9:31 PM|
|Author: AssetMangler||Number: 4887 of 8881|
Is there some internal tracking that's showing CAPS as a useful predictor of performance?
The way I see it - and I don't have a lot of intellectual high ground here with my .89 or whatever rating - I don't see how we can sustantially deviate from the market in our collective (resistance is futile) performance. Stock prices are essentially the balance point of the collective negative and positive opinions (and bets) of all market participants. CAPs' statistical sample is so large, that OUR collective opinion will gravitate toward the mean - the market.
In fact, we may collectively underperform and stay underperforming after the first real down-draft. The reason I say this is because we don't have the counter-balancing effect of negative opinions that are reflected by market participants such as specialists and market-makers. We're the "all-positive all-the-time stock-picking network".
I don't see how we can possibly produce an edge (over the market), unless we apply a consistent methodology of some kind. (Imagine that! putting our heads together in a coordinated way to beat the market...)
What would probably be more interesting would be to ASSIGN teams of people stocks they know something about - have them research the crap out of them - and bring back the findings for the benefit of the whole community, in a consistent format that can be digested and compared. Right now if 1000 people are putting in an opinion on Intel - imagine the duplication and wasted effort - and the difficulty in finding the few true insights that the majority have not picked up on.
It could work something like this:
CAPS Team - design research checklists...
Fool A - Company web site / company profile
Fool B - Income Statement
Fool C - Cash flow statement
Fool D - Balance sheet
Fool E - Notes to financial statements
Fools F,G,H - news and anecdotal evidence
Fool I - Conference calls
Fool J - SEC filing monitoring
Fool L - New material developments
Fool M - off-balance sheet and illegal transactions :)
Food for thought...
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