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Author: PaullyR Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8093  
Subject: Re: Underperform scoring (again) Date: 10/4/2007 4:45 AM
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sugekfund,

Well, you definitely resonate with me. I just noticed this on several of the top pickers. I too believe underperforms should be compared against the long S&P position.

Look at it this way. A "foolish" investor can either do one of two things.

1) Sit back, relax, and invest in the S&P index.
2) Go long and/or short away on several stocks (after rigorous due diligence of course).

Therefore, your theoretical CAPS performance should be compared against what option 1 would have achieved.

I doubt your broker would think you were sane if you explained to him/her that you were going to go long the S&P, but found this great stock to invest in. However, in the very same conversation you were also considering shorting the S&P, but instead found some doggy stock to short. It just doesn't make sense.
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