A "CAPScall" occurs when a Motley Fool writer or blogger takes a strong stance on a specific stock or ETF -- either bullish or bearish -- in an article. In that case, the writer would then go into CAPS and rate the stock in accord with the article, holding the argument within that article publicly accountable.
Not every Fool.com article or blog post requires a CAPScall -- it's appropriate when the writer shares a high-conviction opinion on the future of a stock.
CAPScalls create public track records and allow for greater transparency and accountability -- something sorely lacking in the financial media.
The concept of a CAPScall has been in practice at Fool.com for many years. The Gardner brothers have challenged their own writers -- and by extension the financial world -- to "back it up" in posts like this one [Rule Breakers subscription required] and this one [Stock Advisor subscription required]. And there have been some classic examples of that over the years, effectively like this David Gardner piece making a direct call on Lehman Brothers.
The idea was grown out of a frustration with the modern media tendency to "go big" with a market call (broader market or specific stock) but with no accountability; no public scorekeeping mechanism exists for most of the angular pieces in Barron's or The Wall Street Journal; who is noting all the market calls made on CNBC?
Finally, with its effort in November 2011, The Motley Fool became the first financial media source to formalize a culture of self-scoring accountability around opinionated market pieces. The CAPScall was formally designated and launched.
The CAPS platform (launched in 2006) is the critical underpinning to The Motley Fool's CAPScall effort. As an open platform that any member of the general public can join, CAPS enables any single person or source to self-score. With more than 100,000 members having done so as of November 2011, it's clear that there is no shortage of investors in the world able and willing to step up to the plate and be scored for their stock market predictions. However, most of the corporate and professional world is not yet included in that number, which is why The Motley Fool has invested resources in tracking these sources, from places as diverse as Jim Cramer's TV show "Mad Money" TrackJimCramer to the analyst upgrades and downgrades from Wall Street firms like Bank of America. Indeed, the Fool at present count tracks 195 such sources.
For instance, we think Motley Fool CAPS may be the only place in the world where you can find some actual results to help you decide who is more worth listening to, David Einhorn or Tobin Smith. (Click to find out -- the difference is absolutely shocking.)
While these calls are scored and held accountable, the true nature of the CAPScall is not a third-party effort to score you, but a first-party effort to score oneself.
The Fool is in effect betting that it can help the world invest better by encouraging all financial advice seekers to focus on those sources who willingly and even enthusiastically embrace self-scoring. In the same way, the Gardner brothers think baseball is a much better quality game because it is scored, tracking individual and team statistics. As David Gardner has said, "Baseball would be a pale shadow of itself, with far more empty seats, if none of the players wanted to be scored, and none of the fans cared about any of the statistics."