Diary of a Stock Market Loser

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Dear Diary,

This is the end.

It's not the end of me, thankfully. It's also not the end of my uphill battle to muscle my way out of the gutter in the Motley Fool CAPS community-driven market simulation. That lives on, too. However, it is the end of this weekly column.

I began chronicling my efforts to beat the market back in January, when I had an abysmal rating of 0.55. In other words, I was only beating 0.55% of my fellow players, and losing to 99.45% of you. Twenty-two weeks later, my rating is up to 2.09. It’s a nearly fourfold improvement, though it still means that nearly 98% of you are picking circles around me.

Here's how my ratings have clocked in over the past few weeks:

• Week 17: 7.84
• Week 18: 4.20
• Week 19: 4.81
• Week 20: 3.63
• Week 21: 1.53
• Week 22: 2.09

As I have every week, let's go over some of my recent picks and pans.

Making moves and taking names
I did make moves earlier this week. I loaded up on a few emerging-market exchange-traded funds and added a few promising small caps.

However, since this is the last column, I figured I would elaborate on the moves that I am the most proud of and the ones that got away.

I guess I'll start with Week 6. I was fortunate enough to bail on Thornburg Mortgage (NYSE: TMA) at $9.21 back in February. I didn't like the margin-call chatter that was building on the company. The stock is trading for pocket change today. I dodged a bullet there, though the real shame was in not simply ending my bullish call and initiating a bearish position. I would be in much better shape if I had done that.

My best-scoring pick was Baidu.com (Nasdaq: BIDU), which has gone on to more than quadruple since I tagged it as a market-beater during the summer of 2006. It was one of my earliest calls in the simulation, and I guess it goes to show that if your aim is true, time will be on your side.

Patience isn't always a virtue. That was around the same time that I also went long on Sirius Satellite Radio (Nasdaq: SIRI). Despite subscriber gains, narrowing losses, and a blockbuster merger on the cusp of completion, the stock has shed more than half of its value under my watch.

Things can only get better
The one thing that I wish I would have done is made a few more bearish calls. They generally worked out for me, as most of my underperform ratings have gone to casual-dining chains and homebuilders; I even had a successful pick betting against India's Rediff.com (Nasdaq: REDF). I am typically a bull on Internet stocks, yet the valuation of the financially inconsistent company was out of whack. I have been able to ride that one 26% lower.

If my bearish calls held up generally well, that means my bullish calls got me into the cesspool. I was in the wrong place at the wrong time, loading up on consumer discretionary stocks like Crocs (Nasdaq: CROX) and second-tier Internet stocks like Travelzoo (Nasdaq: TZOO).

I own Crocs in my real portfolio, so the dramatic pullback in the resin footwear maker after it began suffering inventory problems and hosing down its guidance hurt me twice as hard.

I did go overboard on Chinese stocks, but as my success with Baidu and others like Sohu.com (Nasdaq: SOHU) show, that move actually helped my overall performance.

So where do I go from here? Up, I hope. I won't be back with weekly updates, but I put links to all of my “Diary of a Stock Market Loser” columns in a blog entry last night, and I will update my progress over there.

I clearly still have a long way to go to earn a respectable score in CAPS, but I'll get there. Join me over at Motley Fool CAPS, to see if we can get through this together.

I'll see you there!