If you can't say something nice...
One of the most annoying things about Wall Street is that the vast majority of the babble out there is entirely positive. Most analyst calls on stocks are positive. The spin on most stocks (delivered by these pundits because they're on "journalists'" speed dial) is positive. The junk on most message boards is overwhelmingly positive, and anyone who's the least bit critical of a stock is instantly labeled a "short."

Nobody likes a grumpus, I guess.

We do!
Except for Motley Fool CAPS.

CAPS, if you haven't been introduced, is our free stock-rating service, which lets you give stocks a green thumbs-up for "outperform" or a red thumbs-down for "underperform." Let's just say that there's plenty of power in the "big red thumb."

CAPS rates stocks based on these investor opinions, but it's not simply a popularity contest. CAPS is smarter than that. It doesn't just look at the number of thumbs; it looks at the quality of the stockpickers wielding them. Because CAPS keeps track of players (more than 20,000 of them right now), it knows who's usually right and who's not, and it rates the stocks accordingly.

That means that the opinions of bad CAPS stockpickers don't matter as much as the opinions of people who have the habit of getting things right, like CAPS leader TMFEldrehad, who has written extensively about the power of the big red thumb.

Worst stocks
So, without further ado, I'd like to introduce you to the 10 worst stocks in our CAPS universe. (In order of worst-est-ness...)



Pegasus Wireless


Conversion Solutions Holdings


National Dentex


iShares iBoxx Investment Grade Corp Bonds


Waste Services


Trans World Entertainment


Hybrid Technologies


Manchester Inc.


Integral Technologies


To put the bearish magnitude of this list in some context, consider that some of the market's most out-of-favor stocks like Doral Financial (NYSE:DRL), Scottish Re (NYSE:SCT), and Powerwave Technologies (NASDAQ:PWAV) aren't even close to being included.

But keep in mind that the CAPS universe -- as large as it is, with 3,400 rated stocks and 20,000 ranked investors -- is still limited. And we've got a bit of a "Kool Aid" culture in CAPS. Just take a look at the number of people who've rated Motley Fool Hidden Gems recommendation Select Comfort (NASDAQ:SCSS). It's garnered more ratings than companies far better known outside the Motley Fool, such as General Electric (NYSE:GE).

Our Fool community members tend to pay attention to their favorite newsletter stocks, and they also take great pride in learning from one another -- or, to put it another way, shamelessly copying picks from top-rated CAPS players.

Welcome to the social
Actually, CAPS aficionados know there's no shame in the shameless pick rip-off. In fact, the reason companies like Manchester, Conversion Solutions, and Pegasus Wireless are ranked so low is because so many top-ranked CAPS players, like TMF Eldrehad, downwithpumpers, MrCaps, turbotrager, pennysplants, and yours truly have a pretty good record at sniffing out overpriced stubs, even before the SEC starts to investigate them. (Cough... Conversion Solutions... Cough.)

That doesn't mean every low-rated caps stock is a scam by any means, nor even a complete loser. National Dentex, for example, seems to be a victim of ye olde Caps dogpile. I gave it a thumb down because of its declining margins and returns, and because I know a bit about that biz, and I don't buy the "story." Soon, word was out, and poor Dentex feels the sting.

But nothing is set in stone. CAPS is all about accountability. So if the dogpile turns out to be wrong on a stock like Dentex, the players' scores will suffer accordingly, and their influence on the ratings of other stocks will diminish as well. CAPS will get smarter, and most likely, so will the players who missed the call.

Foolish bottom line
CAPS is a good time, but it's also a great way to get a read on what some very smart people think about stocks. I dare say you'll learn more about penny-stock superstar Javo Beverage from the CAPS commentary than you will from reading the company's own PR. Opinions are just opinions, of course. But at least at CAPS, you know the past record of the opinionators' previous calls.

Try getting that from Wall Street.

Become a part of the CAPS universe today by following this link to a free registration.

At the time of publication, Seth Jayson had no positions in any company here and he was ranked 4 out of 20,366 CAPS players. View his stock holdings and Fool profile here. Select Comfort is a Motley Fool Hidden Gems pick. Doral Financial is a former Inside Value choice. Fool rules are here.