Invest with an Edge

(others can’t even compete here!)

Microcap Investing

with Mariusz Skonieczny

During 2023, the financial media, YouTubers or whoever had a microphone tried to convince us that we would have the greatest recession of a humankind. We couldn’t go a single day without constantly being scared. It was just non-stop. “Sell everything and hide in a bunker.”

What happened since then? Nvidia soared. Microsoft soared. Alphabet soared. Amazon soared. Now, the general market keeps making new highs. Investors should have listened to Warren Buffett.

Be fearful when others are greedy and be greedy when others are fearful.

Warren Buffett

Unfortunately, investors prefer to be fearful when others are fearful and be greedy when others are greedy. They will never learn.

Now, they are getting greedy when everyone else is getting greedy. Now, they are piling into the names where the easy money had already been made. The fortunes are going to be made in small and microcap stocks. Why?

After the Fed raised interest rates to fight inflation, the liquidity in this space declined by 90 percent. Yes, the trading volumes are 10 percent of what they used to be a couple years ago. Some amazing small cap stocks have been crushed by more than 90 percent and they still haven’t recovered yet. The time is running out.

It is not a question of whether the good ones will recover but when. You see, money managers have to generate alpha for their clients. If they don’t, clients leave. But right now, money managers have no problems generating alpha in the big cap stocks. They have no reason to go after the small and microcap stocks. They can easily get their heroin fix without getting their hands dirty. But when the easy gains dry up, they will have no choice but to move down the value chain. They will have to go after the small and microcap stocks to generate alpha. If they don’t, clients will leave them.

The clock is ticking. It is hard to say how much time investors have to accumulate big positions in the small and microcap stocks before they go on a run of a lifetime. Some of these stocks have been beaten down so much that when they recover and reach new highs, they will create fortunes for investors that have the courage and vision beyond 3 inches in front of their faces. There will be 10-baggers and even 100-baggers in this space.

If you want to take advantage of the biggest mispricing in the microcap space not seen in 20 years, consider joining MicroCap Explosions. It is a private membership group consisting of approximately 200 members. MicroCap Explosions is all about small and microcap stocks that have the greatest potential of creating big returns. The requirement for joining is unlimited patience and big stomach for volatility.



per year