You Have an Edge in the Market—Now Use It
Individuals can outpace the professionals by focusing on small company stocks.
As an individual investor picking individual stocks, you have an edge over many financial professionals—at least when it comes to small company stocks. Managers of mutual funds, pension funds, and private wealth accounts are often restricted from investing in small company stocks, by regulation, by common practice, or by the preferences of their clients for popular “brand name” companies.
You, on the other hand, can seek out and invest in companies that run under Wall Street’s radar, and that have all the hallmarks of a successful business except for size and decades of existence. By focusing on smaller companies for at least some portion of your portfolio, you have more opportunities from which to choose—solid, well-managed businesses selling at reasonable prices.
And then, if you are patient and exercise prudent portfolio management, eventually those small companies in your portfolio will grow, taking their share prices along with them. Even the best-kept secret will eventually be uncovered, and so it is with the gems of the small-cap market that you hide away in your portfolio.
This month’s issue is chock full of interesting small company stock ideas for your portfolio. Market weakness has pushed down prices of many stocks, but the fundamental performance of many of those same companies has created an imbalance that will go unnoticed by the vast majority of market players.
But you have an edge in the market. You can profit from a sound strategy that includes buying when the market is down, holding through turbulent times, focusing on quality, seeking out the undiscovered, and being unafraid of investing in small company stock.
The playing field doesn’t get much more leveled than this. It’s time to get off the bench and play ball.
In this issue of the SmallCap Informer, our first selection has a lock on being the best run business amongst its peers. At its current valuation, this an opportunity to buy now and store away while the returns accumulate.
Our second pick keeps moving down the highway, with an electrifying new business unit that could boost future results considerably. It is also suffering from a lack of investor interest despite stellar fundamentals and a bright outlook.
- DOUG GERLACH, EDITOR-IN-CHIEF
Read the complete commentary and profiles of our two recommended small company stocks in the December 2022 issue of the SmallCap Informer stock newsletter.
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