Scoping out investing sluggers

Though the baseball/investing analogy has gotten a lot of mileage, it's always been one of my favorites. And in the spirit of the World Series, I thought I'd take a look at my favorite piece of that analogy: swing hard at fat pitches.

In baseball, if you swing at anything that comes in your direction you have a pretty good chance of striking out a heck of a lot. Even if you do happen to make contact here and there, your chances aren't all that good of getting the sweet spot of the bat on the ball.

In investing it’s a similar deal -- if you buy stocks indiscriminately, there's a good chance you'll be unhappy with the results. However, if you hold out for stocks that are great businesses selling at great prices, you will likely goose the ol' investing slugging percentage.

A great feature of the CAPS community is that it makes it easy to find players that are at the top of the heap when it comes to slugging percentage. Here are a few of those top players in terms of returns per pick, along with some of their most recent picks.

• Over 70% of the picks from CAPS All-Star seatown206 are beating the S&P 500, and they are on average beating that index by over 40%. That's pretty darn impressive when you stretch that over the 69 picks that he's made. The most recent adds to his portfolio are Microsoft and The Blackstone Group.

• LocoMoko doesn't have as many overall picks as seatown, but his picks have beaten the S&P by 44% on average. His performance has benefited a good deal from the 600%-plus move from China Finance, which he picked last year. Loco's most recent picks include China Mobile and Exel Maritime.

• Fortis Bank is one of the many institutional investors that CAPS tracks. Though Fortis doesn't have nearly as many picks as, say, Lehman Brothers, it has sure made its picks count. Nearly 80% of Fortis' picks are beating the market and on average they are doing so by 41%. The most recent thumbs ups from Fortis include Seattle Genetics and Venoco.

If you're not on CAPS yet, what are you waiting for? Joining the community is free, and you get to show off your investing chops and interact with over 70,000 other players already picking stocks.

(Full disclosure: I do not have a financial position in any of the companies mentioned.)

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Comments

 

Interesting analogy. Every time a stock market rally occurs and you see people, and I mean ordinary middle class working people, cheer, it gives me a bit of a chuckle and makes me shake my head. When will these people realize that many of these gains come at their expense? Cutting the jobs of middle and working class people is one of the primary drivers of these temporary ups and downs of the market. While their 401(k) may temporarily benefit from the market improvement, they have meanwhile lost their jobs. Where did you think the money paid to the winners comes from?  It comes from the less savvy, inexperienced losers. Further, the enticement of the market and belief that everyone should participate helps fund the fat increases in fees and commissions paid to those who don't really care what the market does as long as more money enters and plays. Sounds like Las Vegas doesn't it?

Jay (Posted 03.17.08 11:41 AM) Report Abuse

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