US Finance: Investing – Investing in Micro-Cap Stocks

How to Make Money On Micro-cap Stocks

(NUI) – Over the last year or so there has been a swirl of controversy over small cap stocks, fueled in part by the media and almost in whole by scam artists looking to make a quick buck, albeit fraudulently.

The truth of the matter is that micro-cap stocks can be a good way to invest.

Micro-cap stocks differ from the typical blue chip or “Big Board” stocks because they are speculative investments that carry high risk, unlike their counterparts which have already grown up.

However, in today’s bear market, small can be beautiful.

To find out more about investing in small cap stocks, here are a few steps to follow:

* Find a diamond in the rough. This may take a little digging, but when you discover a stock with a huge upside potential and accumulate shares while the price is still low, the hours you spent on research will be worthwhile.

* Profit by a press release. Small cap stocks tend to react when there is news about the company. After the announcement, however, the stock price will typically fall off. If investing in a small cap company, watch for the stock price to rise on a news release, and then pick up the stock when it settles back down. In these volatile times, the market tends to overreact to news. You need to factor in what is truly being said when the news does come out about a small cap company. Don’t simply rely on the media to do your research for you.

* Avoid chasing stocks. If you’ve found a stock that you’re interested in buying but the stock jumps above your entry price, it’s best to find another stock to trade. There will always be another investment opportunity.

* Know when to get out. As an investor, let’s say you were able to get in on the ground floor and the stock price has increased considerably. But when to sell? Ask yourself this: Are you happy with your profit? Then take the money and run and don’t get upset if the stock price goes higher. Did you make money? Then you are ahead of the game. Period.

For more information about micro-cap companies, log on to www.windowstowallstreet.com.

Charlotte Given is the host of the nationally acclaimed “Windows to Wall Street” radio program heard daily during market hours on some of the largest business talk radio stations in the country. She has hosted more than 10,000 live shows during the past nine years. (2002)