The final session for Day One of O’Reilly’s Money:Tech
conference was a presentation by John Keeling from the Motley Fool’s CAPS
community. CAPS community members rate
stocks and make predictions on whether or not the stock will go up or down
over various periods of time. These
predictions can be combined (taking same-user accuracy into account) to
generate an overall rating for the stock.
Avid Zecco users have probably noticed how these ratings work within our
Quotes pages and our Community pages – each symbol can get a star rating from
one to five.
CAPS just passed its one-year anniversary and presented some
intriguing statistics on how the community-powered stock ratings have performed
over time. Keeling presented slides that
showed that for the past year, 5-star rated stocks consistently outperformed
4-star rated stocks, which in turn outperformed 3-star stocks, etc. In fact, the top-rated stocks outperformed
the S&P 500 by about 12%.
Going forward, Keeling said that they would continue to
refine the algorithms that turn predictions into ratings, and work on creating
investment tools (like a 5-star index) to try and capture actual market returns
from the intelligence of the CAPS community.
At Zecco, we love hearing these kinds of success stories. We truly believe that bringing intelligent, motivated,
self-directed investors together, allowing them to interact, and capturing the
results in some sort of meaningful way is the next big thing in investing. And it’s good for individuals – as well as
for us.
Photo of John Keeling from
duncandavidson on
Flickr