Buy Small Caps for a Reason

"Buy a stock for a reason and when that reason no longer exists, sell it!!!!"

If you don't believe that this is not one of the best pieces of advice you ever received, I'll prove that it is.

Below are several scenarios. If you fit into one of these scenarios, I win. If you don't. I lose.

You heard that Company X is coming out with an announcement. It is supposed to be next week. Three weeks later, there is no announcement. You hold onto the stock and you lost money.

You heard that Company A, a healthcare company, is issuing a press release regarding one of their products which cures or treats something. The press release is issued, the stock doesn't go up, but you continue to hold on. You lost money.

You heard that Company B, a technology company, is getting a big contract. They receive the contract but the announcement says terms will not be disclosed. The stock goes up some but over a few days, it falls right back to the price that you paid. You continue to hold on and then, you lost money.

You hear that Company E is going to beat earnings. Earnings are up slightly or flat. The stock trades flat for a day but you hold on and eventually, you lost money.

This rule applies to all stocks. In fact, most professional traders and investors will tell you that this is the most difficult thing to do but it's essential if you want to be successful.

Are you one of these people? Betcha I won.