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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1257)	2/14/1999 2:22:00 PM
From: Boyd Hinds	Read Replies (2) \| Respond to of 1722

There is so much more information about large caps. Perhaps, but how much is good information and legitimate research? IMHO, the best way to research a company is to go to Edgar, look at the 10Qs and 10Ks, read the management discussions, dissect the financial statements, and try to figure out whether the company is truly growing as fast as it appears to be. What I am particularly interested in is how you can develop any great confidence that these companies will not lose their way or, if they do, that they will necessarily find their way back, or, if not, you can get out without taking a drubbing. This is where diligent research, knowing a company's fundamentals, and employing a value methodology for entry and exit come into play. Nobody can guarantee investing success. All I try to do is understand the risks and opportunities inherent within a company and the industry it operates in. Why is the stock selling for such a cheap price?? Is it Wall Street indifference or a truly poor outlook? Who are their competitors? How do their financial ratios compare to others in the industry? Some companies are so small and unrecognized that it takes several quarters of consistently excellent performance before they get noticed. As far as bad news, well, that goes with the territory. The risks of micro caps are big, but so are the returns. If you read James O'Shaughnessy's book, "What Works on Wall Street", he found that micro cap stocks (<25 million) are capable of truly amazing returns over time: Almost all the superior returns offered by small stocks come from micro-cap stocks with market caps below $25 million....That group achieved a compound growth rate of over 20% for the 43 years reviewed!....They even manage to overcome their breathtaking risk--an annual standard deviation of 34.65%--and land at the top of the risk-adjusted return index.... JOS says that the average investor or mutual fund can't invest in these types of stocks. I agree that institutions certainly have a much harder time. But small investors who get in early and choose well can do quite well IMHO. OS believes that the number of stocks out there is "too numerous for an individual" to tackle. I don't agree. What are your comments regarding my list of stocks?? Do you have any of your own--I'd be happy to review your picks using my own methodology.