Sure, it would be great to have billions, wouldn't it?
Just think -- you could pay for all the premium cable
channels you want. And you could forget about trying to shop
at your local department store on Wednesdays, when it offers
special discounts.
But there's a bit of a downside to having billions. Most
of us, however much money we have, want to have
more. We want our nest eggs to get bigger. That can
be harder to accomplish when you have billions than when you
have mere thousands or hundreds of thousands. Even
superinvestor Warren Buffett of
Berkshire Hathaway (NYSE: BRK-B) has noted,
in his owner manual for shareholders, that, "As our net worth
grows, it is more difficult to use retained earnings
wisely."
Still, there's one area where we have an edge: investing
in small-cap stocks. Here's why:
have more potentialto outperform the market.
Small-caps have
a very promising record in recessions.
Small-caps stand
the best chance of delivering huge returns.
Check out these strong performers over the past year:
Company
CAPS
Stars(Out of 5)
Market Cap
1-Year Return
5-Year Avg. Annual Return
A-Power Energy Generation
Systems (Nasdaq: APWR)
*****
$394 million
123%
N/A
Force Protection (Nasdaq: FRPT)
****
$398 million
165%
20.1%
Northgate Minerals (AMEX: NXG)
****
$712 million
321%
8.3%
Spectrum Pharmaceuticals (Nasdaq:
SPPI)
****
$200 million Continued... |