Wall Street seems to be split when it comes to very small stocks.
Some folks think that trading small companies is the path to fame and fortune.
Conventional Wall Street would have you believe that you’ll lose all of your money. and it’s possible that you’ll develop dreaded diseases, or appendages may even fall from your body if you attempt to speculate in small stocks.
As is usually the case, the truth turns out to be somewhere in the middle.
If you chase small company stocks with a great story, but dubious fundamentals, you will probably experience severe pain and suffering of a financial nature.
If you try to trade in and out of them based on a chart pattern, you’ll probably get your financial head kicked in, repeatedly.
If you buy small company stocks because your insomnia kicked in and some guy on a 2:00 A.M. infomercial suggested it, you can pretty much assume horrible things will happen to your net worth in the near future.
If, however, you buy small companies that are earning high returns on the cash invested in the business and have strong balance sheets, you have a fantastic chance to make life-changing money.