“Your big opportunity may be right where you are now.” -Napoleon Hill
Small Cap Investing
As we all know, investing in micro-cap or “penny” stocks is a high-risk / high-reward proposition. How many times have we all heard “No Risk, No Gain”? The majority of the companies we profile will fall into the “High Risk” category. Many are fundamentally unstable and their stock prices can be highly volatile. Despite our digging and prodding, a fair number of these companies are under-funded and lack the financial infrastructure to execute their business plans as intended.
For those of you that seek out these high-risk investments, you are undoubtedly not averse to the volatile sprice wings that come with the territory.
It is also quite evident that you are not looking for 10% growth in your penny-stock portfolio. Rather, you are probably looking for the explosive return that is commensurate with the risk that you bear in these investments. After all, many penny stocks actually do turn the proverbial corner and evolve into compelling business successes, and in turn reward shareholders handsomely. We all remember Commerce Planet at less than 20 cents not much more than a year ago, or Nighthawk Systems last December at less than 4 cents. The opportunities are certainly out there and our goal is to find them.
We can’t guarantee these kinds of results, and we don’t. We do, however, aim to identify interesting and compelling situations in the market with early stage businesses that we think are worth consideration with that percentage of your investment portfolio that is designated as high-risk and speculative. Ultimately, stock performance should be a direct result of the company’s business and financial performance. So our methodology is to provide insight into the business and financial progress of the companies that we follow – the good, the bad and the ugly. Our hope is that we will have more good to report than not. In full disclosure, some of the companies that we follow have paid us to do so.
More information pertaining to particular companies can be found in our disclosures which can be reached from our homepage. We do not make any guarantees to client companies as to the nature of our commentary, and our commentary is based solely on performance – good or bad. We believe that this is a fair approach and again, we hope to bring timely and rewarding information to your desktop that you might not have had have had easy or immediate access to before. We urge you to do your own diligence on companies that we mention and follow, and the SEC website www.sec.gov is the best place to start.
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The question is not whether or not the U.S. Federal Reserve Bank will cut its benchmark lending rate today, but if in fact the cut will have any impact on our wounded economy.
Whether the cut is .25 or .75 points – either of which would bring the rate to an all-time low, economists fear that the benefits simply won’t trickle down the consumer. Recent rate cuts have done nothing to boost the consumer credit market because given current economic conditions, the banks that aren’t going under find that issuing consumer loans at anything else than a premium is far too risky.
A great example of this is the current market for auto loans. Typically influenced by the prime rate, which was roughly 4%, Monday, the interest for a 48-month new car loan is 6.8%.
With Americans now hoarding their money and growing increasingly content with simply not losing their hard-earned greenbacks, the Fed may need to expend some of its “extra ammunition” in addition to its imminent rate cut to get consumers to start spending again.
So, what happens when the rate hits zero and its back to the drawing board for Big Ben and his crew? Here’s a great report written by Ben Bernanke himself on potential strategies for monetary policy when the key rate hits zero.
Have something on your mind? Ask questions of the editor here. We pride ourselves on our prompt responses.
Don’t forget, our FAQ is pretty extensive and was built by answering questions just like yours. It may already have the answer you are looking for but if not, we are standing by to help.
P.S. If you see any posts that are inappropriate, sponsored or could be considered a misuse of the forum, please report them to the editor so they can be moderated, removed or blocked. Thank you for your help in keeping this forum poignant and useful.
Thank you!
The MSP Team
