The stock market game is not for everyone and certainly not for the uninformed. However, someone with the right strategies and research skills can create wealth even in chaotic times. Some of the wealthiest investors have made their fortune trading in volatile micro-cap stocks.
But knowing where to invest, how much to invest, and when to sell or trade does not come naturally to most investors. You’ll first need to understand what kind of stocks are out there so you can build your own plan.
Have you been thinking about breaking into the small-cap market? You might be wondering “How do I choose a small-cap stock?” Maybe the thought of investing in a notoriously volatile market is daunting. But don’t worry—there are many things you can do to up your chances of investing in a profitable small-cap stock. The key is doing thorough research. Follow these research tips to find the best small-cap stocks.
Do you know what this century’s best-performing stock is? Here’s a hint: it’s not Google, Apple, or Amazon – in fact this century’s best-performing stock started out as a penny stock, and was trading at below US $0.10 in January 2003. Since then, Monster Beverage (NASDAQ: MNST) has skyrocketed to its current share price of US $84 (as of Aug 26, 2020), and has a market cap of more than US $44 billion. That’s an 83,900% return for early investors who bought stock at $0.10!
As an investor, your “edge” is what sets you apart from the competition. It helps you beat the standard market return. In other words, it’s your competitive advantage. Every retail investor is capable of outperforming the experts and seeing greater returns, but the competition is going to be tough. You’ll be up against wealth managers, hedge funds, high frequency and quant traders, institutional investors and other retail investors. As a retail investor, “What’s my edge?” is a critical question you should continuously be asking yourself, whether you’re a beginner or a seasoned pro.
Asymmetric risk is an investment scenario where the potential for profit or loss is imbalanced: the risk is not equal to the potential reward. As an example, if you were to risk $5 playing slots at the casino, but the potential return is $30, this would be considered an asymmetric risk. Conversely, symmetric risk is where risk and reward potential is balanced—profit potential is the same as profit loss. In a symmetric risk scenario, the casino slots would have a $5 risk for playing and $5 reward for winning.
Have you ever tried eating at a high-class, celebrity-bustling restaurant and found that even after you’ve made a reservation, the likes of Justin Bieber or Kim Kardashian are escorted to the first available table? That’s preferential treatment at its finest. Retail and institutional financings are similar: Retail investors are newbies and institutional investors receive preferential treatment. Is it fair? Meh. But does it happen? You bet.
Investors, listen up. It’s time to see if the public companies you finance have first-class digital marketing strategies.
Public companies, listen up. It may be time to reconsider your digital shareholder communication efforts. These days, digital communication is the new reality in attracting shareholders and investors. And while you may think that your website (that may or may not be up to date) and a few scattered emails here and there is enough—it’s not. You need more, much more, and it starts with getting with the times.