Wednesday's Biggest Stock Stars

Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight a few of Wednesday's biggest winners with top ratings of four or five stars:

There's a reason I selected those notable gainers, as opposed to other winners making noise on Wednesday, like low-rated Motorola. Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 140,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 97.1% of the 3,557 members who've rated Yamana have a bullish opinion of the stock. Just three days ago, one of those Fools, chagui66, helped explain the golden opportunity:

Gold will be an essential component in investor's portfolio and cannot be overlooked in light of all the recent injection of currency around the world. We have learned our lesson for not hedging investments. ... This company has several projects that can yield handsome returns in the years to come.

Consistent with that call, shares of several highly rated miners surged yesterday as market anxiety drove investors into the traditional safe havens.

The bullish lesson?
Don't be afraid to play a little metal. There are plenty of paths to investment heaven, and buying into well-managed, reasonably priced precious-metal miners has historically been an effective hedge against rising inflation, a declining dollar, and general market mania. As long as you're willing to stomach the inherent volatility of precious-metals prices, there may be a silver (or gold) lining out there for you, too.

And now for the losers ...
Of course, winning isn't everything in the stock market.

Here are five of Wednesday's biggest decliners with one- or two-star ratings:  

While yesterday's drop in highly rated American Capital may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Just last week, for instance, CAPS All-Star jaygatsby49 refused to extend any credit to Fannie and Freddie: "Going to zero. Day traders can drive it up and down all they want but in the long run, this puppy will mostly likely drop to zero after the government reveals its plan to wind down [Freddie] and [Fannie]."

Consistent with that warning, shares of the embattled mortgage lenders plunged yesterday after The Mortgage Bankers Association proposed a plan to overhaul the U.S. mortgage market and turn Fannie and Freddie into several private companies.

The bearish takeaway?
Never bet on a stock simply because it was bailed out. As CAPS' jaygatsby49 understands, assistance from the government doesn't necessarily mean that common shareholders stand to benefit. Unless you're truly able to discount the massive dilution effects and operating risks that still remain, speculating on "zombie" institutions might end with horrific returns.

The final Foolish move
Investors often focus strictly on stock price movements, without realizing that developing a proper stock-picking process counts most.

Over at Motley Fool CAPS, thousands of investors are Foolishly sharing insightful investment tips to help identify tomorrow's big movers. Over time, consistently reverse-engineering winning -- and losing -- stocks will help you become a more Foolish investor.

Log in to CAPS today and start participating. It's absolutely free -- and a lot of fun!