Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 0

You know, I have to say that I think the CAPS scoring system is biased towards those who short a stock. For example, if I think XYZ stock is going up from its current $20/share price and it does go up to $21, the CAPS scoring gives me a 10% gain. If the S&P goes up 5% in that same period, I have a score of 5.


Now, let's say that I think that XYZ stock is a loser, and I short the stock at $20/share and it goes up to $21. One would think that I lost 10%, and in the real world that is true. In the CAPS world, I get to subtract the 5% that the S&P gained during that same period and show only a -5 as a score for XYZ stock.


Now, in the real world my comparison to the S&P would be a whopping -15% because while I lost 10%, the S&P gained 5% during that same period.


This contest is about comparing oneself to the S&P, and I understand that. Your score is based on your ability to predict how a stock will do RELATIVE TO that benchmark. That score is a poor predictor of the result in real world dollars in the case of someone with numorous shorts though, if that is a significant issue to anyone.



Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.