Simply put, the small cap market
is huge. Nearly 8 out of 10 companies that publicly trade in the United States
have a market capitalization of less than $500 million. A surprising 40% of the
businesses that trade on Nasdaq have a market capitalization of less than $250
million.
Yet these companies get very
little if any analyst research coverage on Wall Street. You may have 52
analysts covering a $468 billion company like Apple, but practically no one
covering the small cap company. The investment news media consisting of
broadcasts media like CNBC or the magazines and financial newspapers also
rarely mention small caps. As a result, the small cap’s stock price rarely reflects
the company’s future prospects.
Yet small companies are the true
leaders of innovation and creativity. Large companies are bureaucratic
monstrosities. Think of the film Office Space where computer engineers stuck in
cubicles feel their creativity is stifled while they are focused on pleasing
middle management writing Testing Procedure Specification (TPS) reports. Large
corporations have become totalitarian work environments where the CEOs are
acting as dictators looking over Stalinesque bureaucracies and even their
brightest staff members feel as if they are merely renting themselves to the
company for a living. The large organizational hierarchies of big cap companies
are slow in making decisions and require sticking to established stagnant
procedures. Startups require innovative entrepreneurs, and that typically isn’t
in a job description for a large company. An innovative entrepreneur would most
likely be deemed a threat by corporate middle management.
Small cap companies are hampered
by little if any bureaucracy and this leads to rapid decision making, fast
adaptability to quick changing markets, and a willingness to take on the risk
of new ideas. Large companies sometimes throw large amounts of money to
innovate and get nowhere due to ineffective internal communication within their
own departments. Clear communication among internal staff and a lack of funds
triggers small companies to come up with different, unique, solutions to solve
the problems that lead to innovations.
Small cap entrepreneurs are the
visionary business people that do market research, create business plans, seek
out investors and financing, and then strive to create products and services
that utilize a country’s resources. They are the true job creators, and not the
management of large corporations that seek to enhance profits by off-shoring
labor or replacing people with automation. They are the value waiting to be
unlocked in the small cap market.
Let QualityStocks become your
portal to small cap investment success
QualityStocks can be your first
step to researching small companies on the leading edge of entrepreneurial
innovation.
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investors. QualityStocks delivers the only newsletter tracking the stock tips
of hundreds of other investment newsletters, and providing a ‘One-Stop Look’ at
the daily highlights of the small cap market. Once you begin subscribing to the
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it.
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