Investor Alert: Small Caps; Big Payout?

Andrew Gordon of Investor's Daily Edge advises investors six advantages of investing in small cap companies.

(PRWEB) March 29, 2007 -- Has a jittery market narrowed investment choices so much that it comes down to losing your shirt or making gains that barely beat the rate of inflation?

According to Andrew Gordon, Senior Investment Analyst at Investorsdailyedge.com, many investors are probably cutting down on risk and turning to safe investments. And since this is a flight and not a stampede to quality, investors won't be terribly late to the party.

"It's very simple," states Mr. Gordon, "If you want to get decent returns from the market, don't get on the same train as big hedge funds and other traders. If you do, they'll be the first ones in and out of the train every time, always leaving you trying to catch up from the back of the crowd. By the time you do, they've moved on to their next destination (or trade). Their big gains become your small gains, and their small gains become your losses."

There's a way out of this "safety or low returns" dilemma and it involves going in the opposite direction of the big boys.

Mr. Gordon adds, "By all means, investors should go ahead and play it safe with a majority of your portfolio. But make room for a few outstanding small-cap companies. They have six advantages that are hard to ignore," including:

1. As investors sell small caps due to a market correction or expected economic slowdown, their prices drop. And while some may be vulnerable to an economic slowdown, others aren't. They're simply caught in the exodus out of the sector. Those are the ones investors should be interested in.

2. Not many analysts cover small caps as a rule. As more analysts bring them on board, the price to earnings ratio (P/E) will get higher, putting upward pressure on their share prices.

3. As small companies, relatively small increases in revenue can grow their sales by 50 percent, 100 percent, or more. This pushes earnings up, and with higher P/Es, share prices go up faster than the rate of earnings growth.

4. Many are too small for institutional investors. As they get bigger and prove themselves, these big investors will move into these stocks, providing yet another way for these stock prices to grow.

5. In the meantime, these stocks are not as vulnerable to the whims of the big boys as larger companies are. They have a bigger proportion of individual investors. When something very good or very bad happens, individual investors aren't going to be left in the dust when getting into or out of these stocks.

6. Small caps have many of the advantages of penny stocks without the risky downside. They're listed on major exchanges and have to follow accepted accounting and governance policies. They have a record to go by. They do SEC filings. In other words, investors can research and qualify them.

According to Mr. Gordon, "Right now, there are some very attractively priced small caps available. Small caps that are also value companies can make great investments. When the market corrects again, there will be more. It's time for you to add a couple of these stocks to your portfolio, especially if you don't mind a little volatility. Just stick to your stop-losses, and you should be okay."

For more information about leveraging small cap companies and to read the full article visit www.investorsdailyedge.com.

About Andrew Gordon and Investor's Daily Edge (www.investorsdailyedge.com)
Mr. Gordon has a Master's Degree from the London School of Economics and over 25-years of experience. He's also authored six books on the global markets, including China's Oil and Gas Industry, and The World Coal Market. Mr. Gordon specializes in identifying deep value companies with a solid margin of safety as well as income investments with a strong potential for capital gains. He has also become a leading expert in utilizing Exchange Traded Funds (ETFs) to profit from rising and falling market sectors. Mr. Gordon is is currently the Editor-in-Chief of two monthly investment research services -- INCOME and The Wealth Advantage.

Investor's Daily Edge (www.investorsdailyedge.com) is a free investment newsletter that's delivered by email before the market opens. In each weekday issue you'll receive clear recommendations and practical strategies for protecting your portfolio and multiplying your money -whether the market is rising or falling.

To schedule an interview with Andrew Gordon or other analysts at Investor's Daily Edge, please contact Wendy Montes de Oca at 561-921-0001.

# # #