Small-Caps Remain Your Best Speculative Bet

Despite a magnificent surge in small-cap stocks since 2009, I believe that the best opportunities in today's marketplace still remain with the smaller issues in the stock market.

These small-caps opportunities remain because of the nature of Wall Street. There is a structural disadvantage to size. A fund that manages $10 billion cannot invest in businesses that have market caps below $2 billion. If that fund were to allocate 3% of its assets, or $300 million, to a $2 billion company, the fund would acquire 15% of that company, and that would be a highly unattractive bet for a couple of reasons. First, to buy 15% of any company in the open market would create a substantial advance in the price of the stock. Secondly, most investment funds need to own positions that can be readily disposed of without price disruption....392 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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