The Motley Fool Discussion Boards

Previous Page

Motley Fool Pro / Z Pro: CAPS Corner

URL:  https://boards.fool.com/flaws-in-the-caps-system-27118833.aspx

Subject:  Flaws in the CAPS system? Date:  10/22/2008  11:11 AM
Author:  johnnyvol Number:  75 of 502

First off, let me say I'm completely on board with statistical analysis to help screen stocks. The more refined I can get my data the better, but only as a place to start. With that said, I have a concern about the CAPS system as it relates to the scores and how the higher rated players are weighted when it comes to rating a stock.

I know no one on these boards so I'm not pointing fingers or passing judgment. However, it seems, at least on the surface, that one can become highly rated rather quickly by closing winning positions and "locking in" accuracy. Look at the highest rated players and see how many ended picks have been accurate versus the number active that are accurate. It appears that the system can be manipulated toward higher accuracy, which in turn gives a player a better score.

Granted, those players made an awful lot of accurate picks, and I see no fault in closing a pick once your opinion of the underlying stock has changed, but many are being ended in relatively short order as compared to the time frame of the pick. I also know the time frame has no bearing on the pick in CAPS, it's just there for reference. I would find the players closing winning positions to be more honest, however, if the time frame chosen when the pick was made more closely matched the time frame the pick was active in their CAPS portfolio.

I have been a Fool member since 2001 or so, and only just began rating stocks myself, so I do not see myself as a guru or even a good stock picker. I do, however, own most of the stocks that I rate.

This is not a rant or a call to arms, just one Fool's view of what might be a CAPS flaw.
Copyright 1996-2022 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us