The Small Company Phenomena Investing and getting large returns

Now that we know why stocks provide superior returns compared with other investments, let us take a look at a strategy of finding stocks with the best potential profit. My research of stock performance data shows the size of a company is the most reliable forecaster of future investment returns . Typically small firms have higher investment returns than large firms. The connection between company size and future investment returns covers the entire size spectrum and is not limited to the littlest stocks.

Historic return information shows that average investment returns increase as one moves from the largest companies to the tiniest. This correlation means that past annual returns are valuable in predicting future annual returns. Small and micro cap stocks have constantly provided higher investment returns than midand large cap stocks during the last 70-Years and based mostly on historical correlations should continue doing so in the future.

The table that follows depicts investment returns relative to the scale of a company during the last 70-Years. This table clearly demonstrates the inverse relationship between the scale of a company and investment return. The biggest corporations produced the lowest returns and the smallest firms produced the highest returns. A $1,000 investment in mega cap stocks grew to $1.5 million; giant caps $3.5 million, mid caps 4.7 million, small caps $5.8 million and micro caps $11.4 million.

The Best Profit Opportunity of Your Lifetime!

My experience investing in micro cap stocks over the past 17 years and my information research has led straight to the discovery of the vast profit opportunity available from investing in micro cap stocks. My research explains micro cap stocks provide the best investment returns compared with all other types of investments.

The table below compares the expansion of a $1,000 investment for varied investments during the last 70 years. This table dramatically exposes micro cap stocks out perform all the other investments by a wide margin. A $1,000 investment in micro cap stocks grew to a fantastic 11.4 million greenbacks.

Over the same period the growth of a $1,000 investment in Treasury Bills, gold, Treasury Notes, corporate bonds and home costs ranged from $16,817 to $63,131 and was insignificant compared against the returns for stocks. A $1,000 investment in the S&P 500 Index grew to $1,287,957 demonstrating that stocks and particularly micro cap stocks supply the best profit opportunities to be had today.

The graph that follows shows the growth of a $1,000 investment over the past 70 years for micro cap stocks, S&P 500 Index, home costs, corporate bonds, Treasury Notes, gold and Treasury Bills.

Chuck Hughes Investing and Returns

This entry was posted on Friday, January 27th, 2012 at 9:15 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.