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Has the team analyzed whether there is more value in the All-Stars ratings of a stock versus then entire community? I've been tracking All-Star performance ratings figuring they (being All-Stars) were more likely to get the stocks right. I'm interested in assessing which is the better predictor of performance.

Bonus question, do you value the Star rating (1-5) more than the outperform/underperform relative weighting?


Thanks,

Scott
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Has the team analyzed whether there is more value in the All-Stars ratings of a stock versus then entire community? I've been tracking All-Star performance ratings figuring they (being All-Stars) were more likely to get the stocks right. I'm interested in assessing which is the better predictor of performance.

I do know that the opinions of All-stars weigh more heavily than the opinions of non All-stars when it comes to determining a stock's 1 to 5 star rating, if that was your question.

Bonus question, do you value the Star rating (1-5) more than the outperform/underperform relative weighting?

Speaking for me personally, I value both of them. One other thing I like to do is to determine if there is a significant difference between the relative outperform/underperform weighting among All-stars when compared to non All-stars, as this may be an indication of where the 'smart' money is headed. Of course this is just one piece of information which needs to be backed-up with a good deal of additional research, but it is one of the ways I use CAPS data to help me analyze stocks.

Regards,

Russell (a.k.a. TMFEldrehad)
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The star ratings are based on the outperform/underperform ratings with the higher rated players having a larger influence on the stocks' rating.

-Brian
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I've looked, but could not find the algorithms used to determine star ratings. Are they published?
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Hi SL65Racer,

Great questions here.

It's already been mentioned here, but yes, all-star ratings get a higher weight than non-all-star picks.

We've also found that four- and five-star rated stocks as a group outperformed the market, while one- and two-star stocks have underperformed as a group.

The algorithm for the stock rating is not published, per se, but this is the response on the CAPS FAQ (http://caps.fool.com/Help.aspx):

The actual formula for our company ratings are locked away deep in a vault along with the recipe to Coke, the 11 herbs and spices for KFC, and the robotic plans to Regis Philbin.

Generally speaking though, we take all the picks for a given stock and use three main factors:

* The calls for the picks (e.g. outperform or underperform)
* The time frames for those picks
* The ratings of the members making the picks

Look at that last line again. If you remember nothing else from this section, remember this:

Members with higher ratings have more influence on a stock's CAPS rating.

Our proprietary rating system is designed so that the most successful investors are given the greatest weight and influence on our ratings. Titles don't matter that much in CAPS. It's the track record that counts.


On the CAPS FAQ, you'll also find answers on how individual players' scores are calculated and other topics.

Hope this helps.

Foolish best,

Todd Wenning
PRO analyst
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That's what I needed.

Thanks a bunch,

Scott
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I have many questions:
Do all members have a rating?
If I haven't recommended anything what is my rating?
Are recommendations time and price linked?
Does a rating suffer if a stock tanks after doing well?
Are the TMF staff also rated?



sounds complex, must be some great software program!

Just Fooling
Mark
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Do all members have a rating?
If I haven't recommended anything what is my rating?

You need 7 picks to be ranked. Here's your Caps page:
http://caps.fool.com/player/mrmok.aspx

Are recommendations time and price linked?
Yes, they're linked to the price of the stock and the S&P 500 at the time of the pick.

Does a rating suffer if a stock tanks after doing well?
Until the pick is ended, changes in stock price affects the score of the player. Changes in price don't affect rating of stocks directly.

Are the TMF staff also rated?
Yes. Here's the high rated TMF players:
http://caps.fool.com/Stats.aspx?sortcol=5&sortdir=1&...

-Brian (still in the top 1%...barely)
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Yes. Here's the high rated TMF players:
http://caps.fool.com/Stats.aspx?sortcol=5&sortdir=1&...


Whoops, didn't notice that the sort doesn't get into the URL. You'll have to sort by name and then go to page 44 to see the high-rated TMF players.

-Brian
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Thanks I hadn't understood that area, or even ventured into it!
No fooling!
Mark
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