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


Yesterday's Gain

SMART Modular Technologies (NASDAQ:SMOD)


Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B)


Cypress Semiconductor


VASCO Data Security


Union Pacific


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

Our community of more than 145,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 98% of the 93 All-Star members who've rated Smart Modular have a bullish opinion of the stock. Just last month, one of those top Fools, TSIF, explained why the memory products maker seemed like a smart decision. Here's an excerpt:

While it sometimes appears that [Smart Modular] dabbles in unique low volume products to its detriment, overall they have a great relationship with many companies. Adding [solid state] drives to their portfolio has been very profitable. ... After the climb from $1.00 to now over $5.00 [Smart Modular] has had a nice rebound. Overall, I still expect another 50% or so upside over the next year.

Including yesterday's market-bucking pop, shares of SMART Modular are already up more than 50% since that call.

The bullish lesson?
Never become anchored to a stock's previous price levels. Regardless of past gains, a stock can always go higher if the story remains sound, the fundamentals keep improving, and the valuation remains cheap relative to its future growth potential. As CAPS' TSIF understands, ignoring a stock simply because it's rising in price is one of the easiest ways to miss out on the next round of multibagger returns.

And now for the losers ...
Of course, winning isn't everything in the stock market. Here are five of Thursday's biggest decliners with one- or two-star ratings:   


Yesterday's Loss

JPMorgan Chase (NYSE:JPM)


Hartford Financial (NYSE:HIG)


MGM Mirage


Las Vegas Sands


Morgan Stanley (NYSE:MS)


While yesterday's plunge in highly rated miner Freeport-McMoRan (NYSE:FCX) may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Late last year, for instance, CAPS All-Star JohnMcCloy urged Fools not to chase JPMorgan: "I have little doubt we are in the beginning of a Depression and the government is trying to buy our way out of it which will only compound the problem. Anger at banks is growing as their employees remain wealthy as middle class America suffers."

Consistent with that warning, shares of several Wall Street banks sank yesterday after President Obama called for tighter restrictions to limit risk taking.

The bearish takeaway?
Learn to regulate your regulatory risks. Investing in government-assisted stocks can be wise, but if public sentiment ever turns against your business, a change in regulation could dramatically hurt its ability to stay strong. As CAPS' JohnMcCloy understands, unless you're willing to consider all of the possible ways your stock might get killed -- both in the short and the long run -- there's a good chance you'll wake up one day and get blindsided.

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 retire wealthy.

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

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Berkshire and VASCO are Motley Fool Stock Advisor picks. Berkshire is also a choice of Inside Value, and the Fool owns shares of it. Cypress is a recommendation of Rule Breakers. The Fool's disclosure policy is always the big winner.