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Is this CoBF a Contrarian Indicator?


randomep
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I've thought about this topic but didn't dare to post till now.

 

Are the most talked about stocks on CoBF below average performers? I looked at the investment ideas and sorted by replies and get the following, and I've commented on their performance over the duration of the threads:

 

SHLD - a laggard

BAC-WT - good buy, I guess

VRX - permanent loss of capital (PL)

AAPL - great pick

ALS.TO - PL laggard

BBRY - PL

BH - laggard

FCAU - ??

AIG - good buy

SD - PL

GOOGL - great pick

ZINC - PL

LVLT - great pick

 

Now I admit the number of replies does not indicate popularity. A lot of the bad stocks on that list got a lot of replies because they were in such deep trouble that there is a lot of unknowns and controversy. But there are both sides to every argument and most cases someone is fiercely defending the stock.

 

The list does show that the top most talked about stocks are not very good performers.

 

Just a thought to improve our collective stock picking skills.

 

 

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Hun? It shows that out of 13 stocks, 5 were good performers and 7 were poor performers. (You have FCAU as unknown...)

 

How does this show that the top most talked about stocks were not good performers?

 

My judgment of a stock (or a basket such as these stocks) is whether it (or they) beat the market.  So if I make a equal weighted basket of these stocks, how would I do? I am guessing here but holding basket of these stocks for the last 5yrs would lag the S&P 500 which returned 80% cumulative. 

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I've thought about this topic but didn't dare to post till now.

 

Are the most talked about stocks on CoBF below average performers? I looked at the investment ideas and sorted by replies and get the following, and I've commented on their performance over the duration of the threads:

 

SHLD - a laggard

BAC-WT - good buy, I guess

VRX - permanent loss of capital (PL)

AAPL - great pick

ALS.TO - PL

BBRY - PL

BH - laggard

FCAU - ??

AIG - good buy

SD - PL

GOOGL - great pick

ZINC - PL

LVLT - great pick

 

Now I admit the number of replies does not indicate popularity. A lot of the bad stocks on that list got a lot of replies because they were in such deep trouble that there is a lot of unknowns and controversy. But there are both sides to every argument and most cases someone is fiercely defending the stock.

 

The list does show that the top most talked about stocks are not very good performers.

 

Just a thought to improve our collective stock picking skills.

 

Are you kidding me about LVLT? The original thread in CoBF about LVLT had scores of investors who lost their shirt (and underpants as well). LVLT had 15 for 1 reverse split and has barely outperformed S&P in last 5 years.

 

A typical investor putting equal amount of $ in stocks discussed in this forum will under perform S&P over time. Most cheap stocks are value traps.

 

Also 99.99% of oil and nat gas stocks discussed here have gone close to 0.

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Hun? It shows that out of 13 stocks, 5 were good performers and 7 were poor performers. (You have FCAU as unknown...)

 

How does this show that the top most talked about stocks were not good performers?

 

My judgment of a stock (or a basket such as these stocks) is whether it (or they) beat the market.  So if I make a equal weighted basket of these stocks, how would I do? I am guessing here but holding basket of these stocks for the last 5yrs would lag the S&P 500 which returned 80% cumulative.

 

That's a very different statement than your initial one.

 

I suspect that many of the most talked about threads do underperform, but that's not the same as saying that the top most talked about stocks are not good performers.

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A member wrote a script comparing replies with subsequent performance.

 

There were two conclusions

1 there are some posters who have posted some killer ideas

2 those ideas received almost no replies. The more replies the lower the performance.

 

Hell ya! Why didn't I think of that! That's my next after work project!

 

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While some recent threads were not so great, it's encouraging to see this thread and the Mistakes by BigWigs and Me. We are here to learn and these threads can help. 

 

I think it's probably true that the members of COBF do exhibit crowd behavior which can be seen as contrary indicators.

 

Recall not so long ago the board was full of threads that focused on macro, short-term market moves, and bearish takes of the world.

 

One market observation is markets tend to bottom when small investors become shorts. It seems there may be some truth in that.

 

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Are you kidding me about LVLT? The original thread in CoBF about LVLT had scores of investors who lost their shirt (and underpants as well). LVLT had 15 for 1 reverse split and has barely outperformed S&P in last 5 years.

 

A typical investor putting equal amount of $ in stocks discussed in this forum will under perform S&P over time. Most cheap stocks are value traps.

 

Also 99.99% of oil and nat gas stocks discussed here have gone close to 0.

 

i know nothing about LVLT but I do see the thread started oct 24, 2010 at which time the poster said the stock is below $1. If all that's happened is a 15 to 1 reverse split then it means the stock has gone from $15 to $55 today.  Pretty good by me.

 

 

 

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A member wrote a script comparing replies with subsequent performance.

 

There were two conclusions

1 there are some posters who have posted some killer ideas

2 those ideas received almost no replies. The more replies the lower the performance.

 

This one that Ross812 put together is vote based.

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/corner-of-berkshire-and-fairfax-fund

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I think you made a mistake in the opening post regarding Altius Minerals. Permanent loss of capital? What makes you say that?

 

He probably meant ADV.to Alderon Iron Ore which Altius owns a lot of.

 

I don't think he did mean ADV given that the thread has largely been about Altius and Alderon's development of the Kami mine was only a portion of the original thesis. Altius has underperformed over the past few years, but anyone who has been following the stock would tell you that there has been a fundamental transformation from a company with 3 million in revenues and $200M in cash to a company that pulls in $30M a year and has been putting that money to work investing in new assets while the commodity bear market rages on.

 

It seems odd to call that a permanent loss of capital just because the stock is down from its highs while its industry is in a recession.

 

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I think you made a mistake in the opening post regarding Altius Minerals. Permanent loss of capital? What makes you say that?

 

He probably meant ADV.to Alderon Iron Ore which Altius owns a lot of.

 

I don't think he did mean ADV given that the thread has largely been about Altius and Alderon's development of the Kami mine was only a portion of the original thesis. Altius has underperformed over the past few years, but anyone who has been following the stock would tell you that there has been a fundamental transformation from a company with 3 million in revenues and $200M in cash to a company that pulls in $30M a year and has been putting that money to work investing in new assets while the commodity bear market rages on.

 

It seems odd to call that a permanent loss of capital just because the stock is down from its highs while its industry is in a recession.

 

Sorry I know nothing about Altius, I must've typed the wrong ticker. Now I see it is flat for the last five years and it is in CDN, which means it is definitely underperforming against the SP500? correct me if I am wrong plz.

 

I corrected the OP

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A member wrote a script comparing replies with subsequent performance.

 

There were two conclusions

1 there are some posters who have posted some killer ideas

2 those ideas received almost no replies. The more replies the lower the performance.

 

This one that Ross812 put together is vote based.

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/corner-of-berkshire-and-fairfax-fund

 

Right, that's not it.  I might be able to dig it up, not sure if the author would want it to be posted.

 

He wrote the same thing for VIC, and guess what, results were similar.  There are a few people who repeatedly post great ideas, most post average to below average ideas, and when there is a LOT of discussion the idea usually does poorly.  The best ideas receive almost no response.

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I wonder if there is some "intensity" aspect to the threads that underperform. In other words, it's not just popularity but rather the intensity of devotion of some particularly passionate folks that is the signal to the underperformance.

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I wonder if there is some "intensity" aspect to the threads that underperform. In other words, it's not just popularity but rather the intensity of devotion of some particularly passionate folks that is the signal to the underperformance.

 

Fannie and Freddie?  ;D  8)  ::)

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While some recent threads were not so great, it's encouraging to see this thread and the Mistakes by BigWigs and Me. We are here to learn and these threads can help. 

 

I think it's probably true that the members of COBF do exhibit crowd behavior which can be seen as contrary indicators.

 

Recall not so long ago the board was full of threads that focused on macro, short-term market moves, and bearish takes of the world.

 

One market observation is markets tend to bottom when small investors become shorts. It seems there may be some truth in that.

 

We have this played out many times on this forum. When opinions become overly unilateral, especially about the overall market, start thinking the other way. If Joe Dirt has bought it, who hasn't bought it yet?

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A member wrote a script comparing replies with subsequent performance.

 

There were two conclusions

1 there are some posters who have posted some killer ideas

2 those ideas received almost no replies. The more replies the lower the performance.

 

This one that Ross812 put together is vote based.

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/corner-of-berkshire-and-fairfax-fund

 

I think this is what you are looking for:

 

http://cobff.chrisdrane.com/ all credit to prunes.

 

The original thread was from 2013 - http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/corner-of-berk-scraper-and-fun-facts/msg130959/#msg130959

 

I it would be cool if prunes could update the scraper and see if the trends continued!

 

 

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As you noted, I think this is a bit of a silly exercise.  For one thing, COBAF posters go both short and long (eg VRX).  For another, the stocks people buy or sell don't necessarily align at all with what they are posting on.  I hardly ever talk about the stocks I'm long/ short because quite frankly, no one cares.  Lol

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Other noteworthy points are:

  • A thread often becomes long because an idea is controversial
  • Well-known companies (often large caps) tend to have longer threads than obscure companies (often small caps), because everyone knows the company and can have an opinion
  • We are more likely to notice an underperformer with a big thread than an underperformer with a small thread

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