Small Cap Stocks Strategy by Paradigm Capital Management

1. Small Cap Stocks Strategy by Paradigm Capital Management Small cap stocks are described as the best profit opportunity of their life far out performing any other asset category by a big margin. While it's true that small cap stocks have surpassed their larger cap brethren into the upside they've also outperformed into the downside. Small cap stocks are described as the top 30% of shares with the maximum book to cost ratios traded on the NYSE, AMEX and NASDAQ exchanges. Why are little businesses able to grow faster than bigger businesses? Witness the Law of Diminishing Returns on the Job. It is possible for an enterprise to achieve a stage that further capital expenditure yields less and less yield on that investment. Can you visualize a business the size of an Exxon Mobil using its huge market capitalization grows its earnings at a 50% or greater rate of growth yearly? A company like an Exxon will do well to reach and keep a ten percent rate of growth, however many smaller businesses could develop their earnings at a 50% or greater annual pace. Picture a WWII PT boat running circles round a battleship. There was a time, lately, when the company that has evolved in the Exxon Mobil of now did grow at a much faster speed, but these times are gone. As Rupert Murdoch says, the world is changing extremely fast. Big won't beat small anymore. It'll be the fast beating the slow. To increase the chances of success in the investor's favor, limiting selection of little cap shares into the value category only, the investor is assured of not to pay in price. To additional increase the odds for success, the investor can introduce a time element into the strategy, through technical analysis by the utilization of moving averages'. If a stock is trading above its 40 day moving average, and the 40ma is above its 80 day moving average, the stock is in an upward trend which, clearly, is always the optimum moment to be buying stocks, is it not? Lastly, one must not ignore the risk vs. Reward factor through proper trade management. Determine in advance, before

2. entry, under what conditions the trade would be kicked out'. Through the judicious use of stop loss orders, say 15% or 20% below entry, and\/or if the 40ma passes below the 80ma, whichever occurs first, would be a good rule into follow. Planning for small cap investing, we at Paradigm Capital Management can guide you. With a long history of small-cap investing Paradigm Capital Management is a trusted small cap company and employs a disciplined, bottom-up approach with an emphasis on fundamental analysis and extensive management contact. We have the experts specialised in small cap investment and we can definitely assist you with your financial goal, contact us at (518) 431-3500. For more reading, visit here: https://paradigmcapitalmanagement.jimdo.com/