| It might be said in the financial world that small cap | | | | information will give you a "temperature" as to their |
| investing is a risky proposition. That might have been | | | | profitability direction. With all the right measures and |
| the case if inexperienced investors or traders did little | | | | research, investors can easily find out if they are a |
| research in finding the right stocks to buy. Moreover, | | | | worthy buy in the future months to come. |
| as the world is emerging from a recession, a lot of | | | | 2. Stay away from Pink Sheet Stocks-Pink sheet |
| those small cap companies have gone by the | | | | stocks are generally referred to what I like to call |
| wayside. Being that their company's product or | | | | "underground shares". Companies only selling pink |
| service is too competitive out in the marketplace, | | | | sheets have yet to be endorsed by the stock |
| there is this "checks and balances" process happening | | | | exchange or Nasdaq indexes. Even in a recession, |
| to help eliminate some of those smaller outfits. | | | | these are many times more riskier to carry because |
| Therefore, enabling complete investors to swoop in | | | | the firm hasn't completely developed into a full scale |
| and take advantage by buying these so-called | | | | corporation. And another downside is that if you ever |
| recession proof stocks. Here are some tips to utilize | | | | need to sell your pink sheet stocks, they will be |
| to find the right small cap stocks and cash in on | | | | tough to get rid of due to the fact that the public |
| instant profitability. | | | | are not aware of that particular company. And as a |
| 1. Research a niche market/company-As I had coined | | | | result, keep pink sheets on the back burner and don't |
| in the previous paragraph, a "complete investor" is | | | | consider them until you complete further research. |
| not your traditional investor. As fun as it is to just | | | | 3. Diversify your portfolio, invest in a wide range of |
| take someone's word for it and buy up stock, small | | | | companies, not just one-This should be an easy tip to |
| cap investing requires thorough research. What I like | | | | understand. Plan on investing on three or four |
| telling first time small cap investors, find two or three | | | | different niche markets and spread the money |
| companies with varying products and services and | | | | around. This way if one company's stock drops, the |
| find out as much as you can. Immediately, you should | | | | others will pick up the slack. This is just common |
| start to do your research on the internet, there is a | | | | investing 101, any good portfolio will be broken down |
| lot of company information you can gather and there | | | | into 50% small cap stocks and the other 50% |
| are actually "upper management" contact information. | | | | various blue chips, bonds and other stable |
| Call up these companies, find out what they're | | | | commodities. Overall, a well rounded small cap |
| production looks like, find out if the managers own | | | | portfolio will comprise of an average of 15 different |
| shares of their stock and find out if they plan on | | | | companies. Something to think about when you're |
| purchasing more in the future. Additionally, ask for | | | | deciding to put together your investments. |
| their profitability reports (10K and 10Q), this | | | | |