Why Invest In Small Caps?

When I’m asked why I bother to research all these small cap stocks, when instead I can simply let a fund manager handle my money, I laugh, take out my tablet and show a few graphs similar to the one above.

THAT’s why I, and all other stock pickers in the world, do it, because we get a higher return than a fund manager. Sure the fund manager will do his best to get you a high return, but remember that (s)he’s there in the first place to make a living, not to make your rich. Nobody cares about your money the way you do!

And if you take the time to analyze stocks, it’s best to focus on small caps because research shows they yield the highest returns over time. In addition, the income statements and balance sheets are much easier to understand and in many cases you’re even able to speak with the company’s top management. Try getting a hold of a Fortune 500 CEO.

Remember that new ideas, companies and industries are often born in the small cap arena. And just because many people donate their hard earned money to funds, doesn’t mean you have to do so. So next time someone asks you “Why invest in small caps?”, take out your iPad and tell them: “Here’s why”.

inTEST Corp (INTT – $5.47), an independent designer, manufacturer and marketer of thermal management products and ATE interface solutions, which are used by semiconductor manufacturers to perform final testing of integrated circuits (ICs) and wafers, had been increasing its sales and earnings for quite some time. Late June small cap investors – at the time INTT had a market cap of $40 million – were picking up shares around $3.80. Yesterday it closed at $5.47, up 44 percent after again announcing excellent second quarter results in July.

Sign up for our weekly e-mail newsletter and be the first to receive our best ideas and updates.
For important disclosures, please read our disclaimer.

Leave a Reply

Your email address will not be published.