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It's really quite extraordinary, and as I wrote in a posting elsewhere, I think it may be both the first and last time it ever happens.

I think it's great that we have these CAPS indicies that track the performance of 1 and 5 star stocks. Granted, it's way too early to tell to what extent CAPS star rankings might be predictive (as either positive or contrary indicators), but I love the disclosure.

Now, I haven't the time to do this myself, but what I think might also be helpful to track over time is the success of similar portfolios of 2 and 4 star stocks. Maybe it's just me, but I think it's entirely possible, for example, that 4 star stock might generally outperform 5 star stocks.

The reason? 5 star stocks indicate strong, broad, bullish sentiment - which may find its way into the share prices. I'd be curious to see if, over time, 4 star stocks might be the better choice. With a 4 star stock one is getting a stock that the commmunity regards highly, but perhaps without quite the risk of overpaying for quality that might accompany a number of 5 star stocks.

I also wonder if the same might be true of 2 star stocks vs. one star stocks, only in reverse (i.e. I wonder if 2 star stocks might actually underperform their 1 star bretheren) - although I'd be a bit more interested in the 4 star vs. 5 star comparison.


(a.k.a. TMFEldrehad)

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