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|Subject: Re: CAPS is not meant to be a mirror of performa||Date: 2/16/2007 3:42 AM|
|Author: woof321||Number: 4928 of 8881|
Hi Russell, hope you're doing well.
Regarding Whole Foods, I think that illustrates the problem. You mentioned that you did little research or DD, but simply noted the very high P/E and voted thumbs down. I don't see anything wrong with being rewarded for being right in this case, but what does "right" even mean under these rules?
Your last pick was underperform over 5-yrs from 8/14, when the price was 49.60. You closed it three months later at 49.46 for a 10.7 pt gain (S&P did great). Now suppose some other player thought the high P/E was justified (it was near an 18-month low, after all) so he picked 5-yr "outperform" on exactly the same date and at exactly the same price as you. By 10/16 he says "Self, this P/E is getting a bit pricey, let's bail". He closes at around $65 for a bit over 20 pts. Twice as many points, a month sooner, opposite direction, but equally correct. Does it make sense to be rewarding full accuracy credit, exactly as much credit as I'd get for finding a 10-bagger, for tiny little 5-pt gains when stocks are swinging back and forth by 20-30 points in a month?
And isn't it really silly that two players can make completely opposite 5-yr predictions and both be considered "correct" within a couple months? See how this is like my joke about picking the Bears in the Superbowl and closing out my pick after the first quarter?
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