Why Invest in Smaller Growth Companies?
Just One Reason: The Potential Profits Are Tremendous!
On average, smaller companies grow tremendously faster than larger ones!
This chart shows the average performance of every public company from 1998 to 2013. The smallest companies produced the highest returns – which makes sense, since those companies had the most room to grow!
This chart illustrates the tremendous gains which have been earned by the above diversified small- and micro-cap mutual fund.
The potential gains are tremendous, but the potential losses are equally tremendous! Speculating is a two-edged sword; just one successful investment in a tiny company can radically change the quality of your life — you can buy a boat, a summer home or pay for your kid’s education. I’ve made millions speculating and I’ve lost millions as well. It has taken me 40+ years of experience to sort out how best, at least for myself, to speculate. I hope you learn from me. I hope you don’t make the same mistakes I’ve made. Please feel free to call me, I sincerely want to help you grow your business, and keep your winnings.
Knowledge of this fact and acting on this knowledge can serve you very well, if you’ll go about speculating very carefully and prudently. This means investing time, before your money, in through due-diligence and never investing more than you can lose in any one company, to prevent the loss from effecting the quality of your life.
By adding the service of helping your clients speculate for potential big gains can greatly accelerate the growth in your new business acquisition activities. You’ll be surprised at how many of your existing clients people, both middle class and the wealthier ones would enjoy investing in and talking about the exciting stocks they own. With just a bit of success speculating and you’ll hear from their family members and best friends. People love to talk about their successes. You will get new referrals (clients) without ever asking for them. Your clients will get very excited investing in a new drug to treat cancer, a breakthrough in space technology or a little gold exploration company. Who wouldn’t!
Face it, the majority of stocks are boring, the markets rise and fall, you just buy and hold. Nothing unique here; Speculating can be very rewarding, exciting and a great way to develop new business. The only way you’re going to distinguish what you do, who you are, from every over asset allocator, is by BEING DIFFERENT, this means doing SOME things differently, not everything, just around the edges. Truly, “investing to make a difference!” can make a big difference in your career it can help your business take off. JUST DO IT PRUDENTLY!
No doubt, you have clients right now who have some “play” money as they may call it. In my experience, a solid 25% of all investors would “take a chance” on a “flyer” with a small amount of their capital. Approach them candidly, in a “matter of fact” manner – with a simple question – “would you take a flyer with a small amount of your capital?” Prepare them for a potential loss, explain that such investing is NOT right for everyone, even if one can afford to speculate. Don’t try to change someone’s mind, just make a polite offer. A straight forward offer is enough to find their true feelings about the subject.
Remember the rules: 1) Invest nothing more than a small part of a client’s net worth in any one company, 2) Never over-promote, never make promises, and 3) Prepare them for a loss, not a win. Don’t invest their money unless you know they can emotionally, as well as financially, take the loss. On average, very small companies grow tremendously faster than larger ones!