Small caps experiment · Invest & Retire Community

Small caps experiment

This post is inspired by Eric. Eric wrote:

"To achieve a high return with small cap, you would need to focus on stock picking because there are a lot of bad apples within the 2000 companies.

Whereas for blue chip, it is a lot more forgiving and diversification gives you a decent return."

I know the rules, and I am not going to discuss any particular small cap stock. I just want to share that Eric's post made me to start a "small cap stock picking challenge". I allocated 1% of my capital to this. Since fundamentals of many of them is questionable at best, I decided to start with a price-based scan and then read on the company and check the fundamentals.

Since small cap are volatile and prone to manipulation, I have a stop loss order on full position and sell order on 1.3 at the first target.

It works so far.

Since it is just 1% of my money, I won't get rich on small caps and neither I'll get poor because of this experiment. However, as an exercise in both stock picking and money management, I find it engaging and very useful.

Thanks, Eric!

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