How to Share Stock Ratings with Other Investors Online
Several online sites are trying to harness the wisdom of crowds and provide information you can use to boost your investment returns. Some good sources for this collective intelligence are listed here:
The Motley Fool CAPS: This particular corner of the Motley Fool website allows members to enter their ratings on thousands of stocks. The ratings are then compiled into a single average rating that’s available to all users of the website.
Just enter a stock’s symbol into the Enter Keywords or Ticker field and click the Search button, and you see how other CAPS users rate the stock, based on a star rating. A stock with five stars is a strong buy, and a stock with a one-star rating is a strong sell.
But CAPS gets more interesting the more you dive into the menus. Try this. Scroll down a bit until you see the stock chart. Click the On link located below the chart, next to where it says CAPS Rating. Now you can see how the CAPS rating has changed over the past few months, shown by the gold line on the chart.
If you scroll down further, you can also read why certain CAPS members rated a stock the way they did. And even these blurbs are rated by members, so you can read the most highly rated comments on a stock. Anyone can view most CAPS ratings and information, but to rate stocks yourself, you need to register with the site, which is free.
And what does CAPS stand for? You’re going to be sorry you asked. CAPS doesn’t appear to stand for anything, but rather seems to be a play on the word cap, because the Motley Fool’s founders are known for wearing jester hats. Participants in the CAPS system are assigned a color-coded hat, or cap, icon to signal how good they have been at picking stocks.
Stockpickr: This site allows you to enter your portfolio, and the system allows you to look at other investors’ portfolios to get ideas. Stockpickr then spotlights stocks that commonly appear in these similar portfolios and also lets you view popular portfolios. You must register for a free username and password to use the site.
PredictWallStreet: PredictWallStreet lets you start sharing recommendations with others pretty quickly and easily. From the front page, just enter a stock symbol into the search field and click the Up button if you recommend the stock and the Down button if you think the stock will fall.
You can see the average recommendations of other users for other popular stock market indexes or popular stocks. One of the nice things about this site is that you can use it without registering.
Piqqem: The site with the funny name provides a constantly updating summary of recommendations and ratings submitted by its users. The site also lets you practice buying and selling stocks based on information from other users with a simulator.
Wikinvest: If you’ve used Wikipedia to look up obscure facts, you understand that it’s an encyclopedia updated by users. The same idea applies to Wikinvest. The site allows users to submit information about a variety of stocks, and those comments are summarized into a bull case and a bear case for the stock.
To access Wikinvest’s information on stocks, you just set up an account first, which is free, or you can go straight to Wikinvest’s comments by clicking on the “Search the Wiki” link in the upper-right corner of the screen.
Following the crowd when it comes to investing can often be a bad idea. During periods of market manias, when investors become overly bullish about particular types of stocks, they often bid stock prices up too high and set themselves up for disappointments.
Some investors, who call themselves contrarians, instead figure out what the crowd is doing and then do the opposite. If the crowd is bullish about a stock, a contrarian would assume that the group is wrong and be bearish about the stock.