Micro cap value investing

Investing in the stock market can be a bit of a daunting prospect, particularly for someone that has no experience. Tales of success and horror stories abound, making it clear that while not a definite danger, stock market investment is a choice that must be undertaken with knowledge and care. Looking into various stock market research tools can help in this endeavor, as well with avoiding legal pitfalls like that of falsifying investor information. The following information will hopefully give a brief overview of some essential stock market basics, enough to get one started on their safe journey of stock market investment.

1. Different Size Cap Stocks

It perhaps goes without saying that understanding the different sizes of stock and their terminology is important to considering investment, particularly if one wants to avoid falsifying investor information. To start with, microcap stock refers to those of public U.S. companies with a market capitalization between $50,000,000 and $300,000,000. Microcap investing therefore probably seems more alluring, yet more expensive. Conversely, company shares below $50,000,000 are considered nano cap stocks, which may prove more affordable than micro cap value investing. Over all, small stocks in U.S. returned an average of 12.27% between 1926 and 2001, giving some perspective to their lucrativeness.

2. U.S. To Global Stock Comparison

Despite a few setbacks over the course of history, the U.S. has maintained an impressive market in micro cap equities. In considering all the global markets of 2012, the largest was by far that of the U.S. at about 34%, followed by Japan at 6% and then the United Kingdom at 6% as well. Even in 2008 before the recession, the Dow Jones Industrial Average added more than 900 points, presenting the biggest increase in index history. In total, there are about 9,000 publicly traded securities in the U.S. total. We can only assume, therefore, that the U.S. market is indeed a safe and lucrative bet.

3. The Viability of Stocks and Bonds

It is, of course, crucial to understand the viability of various types of stock and bond before making any kind of significant investment, before putting oneself at risk of falsifying investor information. To compare the two specifically, the median return from stocks was 11.4% while that of bonds was 4.3% over the course of several 25 year periods. While bonds are an important method of accountability, stocks themselves are no doubt the more viable and lucrative of the two.

This very basic information will hopefully shed some light on the confusion that is navigating the stock market, as well as prepare for the pitfalls that can await a lack of caution.

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