Replies to post #734 on Value Microcaps Pick Six Lotto 09 (PSL9)

[lentinman]

Cliff: Mr. Sheep:

Mr. Sheep would be 4th by average and 5th by rank.

I'm not surprised by his continual outperformance, but I continue to question whether he will ever win a contest based on my 7 part prediction (1 Million times I ran PSL1 on the computer) and the results. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=6923727

Also, it is interesting to look at the Mr. Sheep rankings of the previous champions. I think PSL1 is an anomaly due to lots of things - not the least of which is that it wasn't blind. But since PSL1, only THREES (#9) has been anywhere near the top of the Mr. Sheep rankings.

PSL1: 1
PSL2: 28
PSL3: 77
PSL4: 27
PSL5: 54
PSL6: 61
PSL7: 27
PSL8: 59
PSL9: 9

Again, to summarize my 7 Part discussion from PSL1, the key to this is that if you share your stocks with a bunch of people, you are more likely to be relegated to the middle of the pack. If you don't share, you are more likely to get first OR last. Since Mr. Sheep is good, you are a lot more likely to do poorly than great, but #1 is more a function of someone (anyone) having a unique stock (or stocks) that outperform while sharing them with nobody else (or relatively few).

The best real-world example is KIK. Here are his Mr. Sheep rankings: 73, 73, 77, 80, 66, 87, 28, 44, 67 - extremely low average. The risk associated with that - meaning very high or very low returns is also evident. He has four top-5 finishes, but also has ranked 64, 68 and 72.

By deviating from Mr. Sheep you are going to have a worse return (on average) in most cases, but you are going to increase your odds of actually winning.

Len






Bull markets may rise along a "wall of worry"; bear markets fall along a "slope of hope." -- John Markman, July 24, 2008