Mastering Microcaps

"The problem with setting an absolute value into the definition of microcap is that such an approach has not been effective historically."

"Surprisingly, the second-highest-weight sector for microcaps, the financial sector, is the most heavily weighted sector in the S&P 500."

"The hunt for the next blue chip and the greater probability of a big reward are what attract investors to microcap stocks. Although it is possible to catch the next Microsoft, it is not likely."

"Stocks generally outperform their historic average return when the Fed is tightening."

"The seasonality of stocks is not the best way to find stocks that are good long-term investments, but understanding seasonality can enhance trading and provide some insight into a stock's price history. "

"Pay attention to factors that affect future earnings expectations."

"If possible, investors in microcap stocks should trade in smaller lots."

"The need to apply recent technological developments to production processes will be an engine of growth for innovative smaller companies. "