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Market Capitalization as an Investment Technique

By Chuck Hughes


I'm here to tell you the 'Lost Decade ' of stock investing has been found! Just like Mark Twain's death, I believe the demise of the stock market has been seriously exaggerated. No, I'm not naive or a Pollyannaish. I know that the broad based S&P 500 Index, the blue chip DJX Business Average and the Nasdaq Composite Index all produced negative returns during the last decade from January 1st 2000 to Jan 1st 2010. But all is not lost. Rising out of the ashes of this decade is a stock asset class that has performed very well! I want to introduce you to this asset sector.

I also need to share with you the answer to the question that I get frequently, "How do I make cash in this market?" The answer is straightforward and the profits are large. Little company stocks are the savior of the investing world. I want to show you how small company stocks produced fantastic returns during one of the most turbulent investing decades in history! I would like to demonstrate what tiny and micro cap stocks can do for you!

Nothing is more exciting to me than the profitability and performance record of small company stocks. Can you let me know, over the 2000 to 2010 decade which asset class has out performed the major asset sectors such as the S&P 500 Index, Treasury Bonds, home prices, corporate bonds and Treasury Bills? You may not believe it, but the answer is the 'under the radar ' micro caps stocks. Micro caps have become the 'little stocks that would ' in the 'lost decade ' of the investing world.

Don't let the name fool you; there is nothing micro about their profit potential, nothing tiny about their historical return performance. Not only have micro cap stocks produced a 179% return in the Lost Decade, but they have out performed all asset classes over the past seven decades . That is 70 years worth of profits! I believe they should be renamed 'macro-profit ' stocks, because that is what they are and that's how they have out performed over the last 70 years. You are about to find out the incredible and continual profit potential of micro cap stocks. But first, let me tell you more on the little stocks that could.

Tiny and micro cap stocks are typically ignored by The Street researchers and academic backers. When a big establishment or mutual fund decides to speculate in a stock, many times they should buy anywhere from $30 to $50 to $70 million or even more of the stock. For many micro cap stocks this would end in purchasing all of the shares notable which isn't permitted by securities regulations. Also, many retirement funds are restricted from owning stock that is priced around less than $5 per share. This restriction limits most hedge funds from investing in small and micro cap stocks. With their little market capitalisations, micro cap firms are just too little to attract the attention of Wall Street establishments and stories media.



 
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