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No. of Recommendations: 28
Greetings once again Fools!

Since it's Monday, it's time once again to delve into some of last week's CAPS data to see if we can find anything interesting, insightful, or perhaps most importantly, helpful when it comes to making some of our investing decisions.

Before I get into this past week's data, however, I think it's important to review some of what we looked at in the prior week.

As you may recall, last week I came up with what I thought might be two key take-aways. The first being:

Perhaps most interesting, however, are the multiple thumbs-down calls on bearish ETFs, namely BGZ, EDZ, and MWN.

Again, we don't have pitches to rely on, but I'm guessing that these Top Ten participants were looking for short-term bounces - perhaps related to the Obama inauguration or the pending economic stimulus bill.


Now, the results change minute to minute, but here's how the Top Ten had done with the aforementioned calls as I sat down this morning to take a look at the data:

BGZ - two calls, scores = +2.43 and +5.91
EDZ - two calls, scores = -0.24 and +15.82 (closed pick)
MWN - two calls, scores = +4.83 and +8.77

Looks to me that our Top Ten did a pretty good job here of predicting this rally vs. the S&P in at least the short-term. Furthermore, only one of the six picks was closed, so it's possible that our Top Ten believes the short-term bounce may not quite be over yet (though we can't know for sure with just this data).

The second take-away:

It appears as though three of the Top Ten seemed to think that hard assets, and more specifically, natural resources, made good thumbs-up calls in the past week.

Here's how those three calls did this past week:

DXO - one call, score +5.37
TCK - one call, score +16.74
UNG - one call, score +6.35
USU - one call, score +3.64

Again it appears that our Top Ten were, as a group, pretty much spot-on. This shouldn't be too surprising I suppose, as I imagine these people are in the Top Ten for good reason.

Granted, it is but one week of analysis to go on, and one doesn't want to read too much into one single set of data points, but given the success the Top Ten had, as a group, in our first week, I think it might be a good idea to see what they've been up to over this past week as well.

While slightly less active than in the preceeding week, the relationship between underperform and outperform calls made by the folks in the Top Ten hasn't changed by what I'd consider a significant amount:

Total underperform calls = 56
Total outperform calls = 17

In keeping with the way I looked at the data last week (which seemed to work - but again, is only one week so I wouldn't read too much into it yet), those underperform calls with more than one Top Ten participant weighing in are:

Ticker: Company/Description
BTH Candles/decorations
CTX Commercial Construction
LJPC Biopharmaceuticals
MNLU.OB North-American oil and gas

Unlike last week, I don't see a convincing central theme here, but given the slowdown in consumer spending and commercial real estate / construction one might interpret this data to mean that the Top Ten participants aren't yet convinced that our economy has yet to turn the proverbial corner.

Here are the Top Ten participants' outperform calls for the week:

Ticker: Company/Description
BAC Bank of America
C Citigroup
DORM Automotive replacement parts
FNDM.OB Online financial information
GBNK Guaranty BAnk Corp
HBAN Huntington Bancshares
IKM B of A 5.875%
ISRL Oil and natural gas - Israel
MEI Electronic Components
MWA Water infrastructure
NCR ATMs and kiosks
PDS Contract drilling (oil and gas)
PMAH.OB Illuminated signboards
PRGO Pharmaceuticals
TXT Small aircraft
YAVY Yadkin Valley Financial

First, a couple of these picks (ISRL, PDS, and perhaps even MWA) seem to dovetail with some of the other natural resources picks made in the prior week - so it looks like at least some of our Top Ten participants seem to think that this arena still has some fertile hunting ground.

What was surprising to yours truly were the number of banks/financials that made this list. We also have more than one Top Ten participant weighing in bullishly in this space, as BAC and C were given the thumbs-up by StatsGeek and HBAN, IKM, YAVY, and GBNK were picked by BravoBevo. Have banks turned the corner? Or are our Top Ten simply calling a short-term bounce based on happenings in the political arena? I don't know what the answer here is, but it'll be interesting to see if this is the beginning of a trend.

I hope you've found this week's installment of This Week in CAPS helpful, and as always, your comments, crticisms, or your own observations from CAPS-land are always appreciated and encouraged.

Until next week...

Regards,

Russell (a.k.a. TMFEldrehad)
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No. of Recommendations: 1
Have you ever thought about changing your screenname to TMFCaps?

Fuskie
Who suggests as an alternative TMFKingOfCaps...
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No. of Recommendations: 0
The timing of the multiple underperforms on La Jolla Pharmaceutical (LJPC) were probably because it just made a rebound above $100 billion market cap and became ratable again. I've got to think these are technical trades since the phase 3 results for its lead drug aren't expected to be available until the second half of the year.

-Brian
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No. of Recommendations: 2
I've been trying to figure a way to use CAPS to improve my own portfolio results though I can't say that I've been able to develop anything that provides precise "ahead of the curve" insight that resembles anything other than a follow the leader approach (aka leading a shep to slaughter) or that requies less than a full time analyst position.

Thanks for your efforts as your CAPS rank certainly supports your knowledge of successful analysis and investment selection.

I'm wondering how much the changes to a "Top 10" portfolio has contributed to its recent weekly success versus a "buy/hold" of a core portfolio of stocks.

There is certainly something to be said for volatility and insightful themes of current markets. I guess I'm wondering whether the "Top 10" are primarily short term traders with unlimited sources of new ideas (those with direct access to real time market information and do this for a living) to keep adding to a ballooning portfolio (though I'm not sure this "ballooning" aspect matters) or whether there might be a more constructive portfolio development theme at play here.

-FLogic

p.s. I'm not sure what motivates those in the Top 10 and more broadly, the All Stars to actively manage CAPS other than "KIng of the Mountain" accolades. Again not sure it matters as long as they stay motivated!
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No. of Recommendations: 1
p.s. I'm not sure what motivates those in the Top 10 and more broadly, the All Stars to actively manage CAPS other than "KIng of the Mountain" accolades.

Having been there once upon a time, I can tell you that being 'King of the Mountain' is pretty fun. :-)

That said, I think there are probably about as many motivations, or mixtures of motivations, as there are CAPS participants.

I guess I'm wondering whether the "Top 10" are primarily short term traders with unlimited sources of new ideas (those with direct access to real time market information and do this for a living) to keep adding to a ballooning portfolio (though I'm not sure this "ballooning" aspect matters) or whether there might be a more constructive portfolio development theme at play here.

I think there's likely some mixture of both, not only among different members of the Top Ten, but also within each of the Top Ten's individual pick lists.

While I haven't kept my CAPS pick list as active as I have in the past (something I should probably correct at some point soon), I can tell you that some of my picks were short-term trades, while many others were based on a long-term view more akin to portfolio development.

I think that's one of the beauties of CAPS. Where else does one get such a mixture of investing styles, knowledge bases, different perspectives, and more, all gathered and coalesced into stock rankings from 1 to 5 stars?

Regards,

Russell (a.k.a. TMFEldrehad)
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No. of Recommendations: 5
p.s. I'm not sure what motivates those in the Top 10 and more broadly, the All Stars to actively manage CAPS other than "KIng of the Mountain" accolades. Again not sure it matters as long as they stay motivated!

I'm not in the top 10, but have been hanging around the top 1% for a while. I can't speak for anyone other than myself, but
a) I have fun with CAPS,
b) the CAPS pitch system makes a convenient diary/investment notebook,
c) by playing CAPS I'm more aware of what my investments are doing and have picked up one or two new ideas I wouldn't have otherwise; even tho' they haven't all been good ideas,
d) CAPS is very useful as an advanced watchlist,
e) writing pitches and blogs has sharpened my stock research skills (although many may argue those skills are still pretty dull)
f) it's fun to see your pitches or blogs quoted in TMF articles every now and then
g) it's possible to set up portfolios to test general theories. For example, I'm currently tracking the performance of banks that took TARP money using player name TARPedBanks. Last I checked it was in the bottom .02% after running for only about 2 1/2 months.
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No. of Recommendations: 2
Hi guys,

Todd W brought this thread to my attention. I was particularly pleased to read "it's fun to see your pitches or blogs quoted in TMF articles every now and then." As sector head (chief editor) for the CAPS content (the published articles), I'm glad to read that seeing your pitch in print still brings a thrill. :-)

Even better, being at or near the top in CAPS can get you media attention outside of TMF. Late last spring, dwot, TDRH, and SpecBear were highlighted in a Barron's article discussing various online investment communities. Unfortunately, the Barron's site no longer has that article available (at least the link I had goes nowhere). But you can read Todd's writeup of it at http://www.fool.com/investing/general/2008/06/02/pick-stocks....

Keep on throwing those pitches and working on being the best. That effort helps not just yourself, but more people than you may realize.

Cheers,
Jim
Fool online financial editor
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No. of Recommendations: 1
TMFGebinr,

FYI--I too had the experience of having part of pitch appear in a TMF article.

It completely floored me and made me a little uncomfortable (not sure I'm worthy)!

Still marveling at the whole Motley Fool animal.
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Russell,
I think that's one of the beauties of CAPS. Where else does one get such a mixture of investing styles, knowledge bases, different perspectives, and more, all gathered and coalesced into stock rankings from 1 to 5 stars?

Except LTBH? The problem I had with CAPS was that I was picking stocks that I thought would do well in the future, looking past the bottom and toward the upside. In other words, the solid companies that I thought would survive, and are therefore currently underpriced. Unfortunately they continue to underperform for now so my score kept getting trashed.

I didn't know what to do so I quit picking.

Don
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No. of Recommendations: 7
Except LTBH? The problem I had with CAPS was that I was picking stocks that I thought would do well in the future, looking past the bottom and toward the upside. In other words, the solid companies that I thought would survive, and are therefore currently underpriced. Unfortunately they continue to underperform for now so my score kept getting trashed.

The perception that LTBH gets trumped by short-term trading in CAPS has been a criticism I've seen before.

Yes, your score might be getting trashed in the short-term, but so what? Sure, it's no fun to sport the little beanie propeller hat (but it is a cool looking hat!), but judging a long-term strategy by looking at short-term results is a mistake in my opinion - not only in CAPS, but in real life investing too.

I was asked this question a while ago, and while it was more geared toward the difference between underperform and outperform calls, it applies here too....

Ever seen a horse race? Imagine a thoroughbred is pitted against a quarterhorse. Out of the gate, the thoroughbred is gonna be eating dust, and will continue to eat dust until the race hits about the 900 yard mark. At that point, the thoroughbred is going to pass the quarterhorse like it's standing still, and will never look back.

If you really did do your job right of making picks, and truly did indeed find solid companies that will survive and are underpriced, CAPS will eventually reward you. It might not be today, this week, this month, or this year - but if you made good picks, the thoroughbreds you're riding are eventually going to hit full-stride.

I didn't know what to do so I quit picking.

Each of us must decide for him or herself wether or not the benefit of CAPS is worth the time and effort invested - but I, for one, selfishly wish you'd keep making picks. After all, more picks makes CAPS smarter, and a more valuable tool for us all.

Regards,

Russell (a.k.a. TMFEldrehad)
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Russell,
Each of us must decide for him or herself wether or not the benefit of CAPS is worth the time and effort invested - but I, for one, selfishly wish you'd keep making picks. After all, more picks makes CAPS smarter, and a more valuable tool for us all.


You're a smart guy Russell. Thanks.

I just might,

Don
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No. of Recommendations: 0
The timing of the multiple underperforms on La Jolla Pharmaceutical (LJPC) were probably because it just made a rebound above $100 billion market cap and became ratable again. I've got to think these are technical trades since the phase 3 results for its lead drug aren't expected to be available until the second half of the year.

Unless of course there's an interim analysis that shows the drug doesn't work (http://biz.yahoo.com/bw/090212/20090212005218.html?.v=1). Stock is down 90% today making those two top 10ers quite a few points.

-Brian (spoke too soon)
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I've been having fun with the CAPs system. I pretty much picked everything at the 5 year point and haven't been churning. I like dividend stocks over time. I reached plus 500 or 85% for about a week and over the fall dropped like a rock to about 2% at -2000, but am working my way back! I'm at about -800 now. I have about 200 picks now and easily go up or down 300 in a day. I'm looking forward to seeing it 10 years from now and saying I told you so! I haven't been afraid to tread into the 1 and 2 stars as I look for the turnaround plays.

John
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Russell,
Each of us must decide for him or herself wether or not the benefit of CAPS is worth the time and effort invested - but I, for one, selfishly wish you'd keep making picks. After all, more picks makes CAPS smarter, and a more valuable tool for us all.


Guess I shouldn't be making excuses. The main problem is I just don't understand the scoring system at all.

Don
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The main problem is I just don't understand the scoring system at all.

The player rating scoring methodology (along with a lot of other CAPS info) can be found here:

http://caps.fool.com/Help.aspx#ratingcalc

If you have a question that isn't answered here, please post it and I (or one of my Foolish colleagues if they beat me to it) will do my best to answer it for you.

Regards,

Russell (a.k.a. TMFEldrehad)
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Russell,

If you have a question that isn't answered here, please post it ...

Well that certainly explains that! I guess I never took the time to read through the FAQs - or forgot them. Here's what I did. Back when I got disgusted with it - felt like LTBH wasn't going to work in CAPS - I ended all of my losing picks! Huge mistake! Now I'm carrying a huge deficit I'll probably never be able to overcome. Certainly not in this market!

Thanks anyway,

Don
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