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Series Overview: It's Better To Know What You Own, Than To Buy What You Don't


Often we are so busy chasing the next best idea, and the next, that we forget about the compelling investment opportunities we already researched. The fact of the matter is that microcap companies can take several quarters or years to come into fruition, thus continued analysis is a requirement. Investors must constantly revisit and review their thesis' on what they own and why they own it.

If I told you to go out screening and find me the best microcap idea each day, diminishing returns would set in and by the end of the week you would be returning a sub-par idea. Point in case, there is no reason to lower your quality standards through a shot-gun approach. A shotgun approach to investing diversification does insulate an investor from risk, but also breeds a sense of ignorance. This ignorance is that each investment is such a small portion of your portfolio that it isn't worth the time to conduct the proper due diligence. But remember, a portfolio is made up of any numbers of companies, and if this approach is applied an investor literally has not done the proper due diligence on their aggregate portfolio.

There is no need to invest in more companies than you can conduct reasonable due diligence on. An investor only needs one or two companies in their portfolio to materialize to have a huge impact on their investment goals, and life. Through continued analysis, an investor understands what is affecting their company, and how they should reasonably react. If a company shoots down on an overreaction, and investor can identify this as a potential buying opportunity, where an overly diversified investor or trader may cut their losses without the proper investigation.

This is why I lead my investing activities with an adage I formed, "It's better to know what you own, than to buy what you don't", as there is nothing worse than seeing a microcap you sold grow substantially while the one you sold it for fails.

Our quick and intuitive continued analysis is a members only feature, and will be released for each company when events warrant an update. At SecretCaps we achieve strong continued analysis for our members through pertinent status updates, analysis blog posts, trade alerts and recorded management interviews.

Members, click here to view our first post in this series on ICTV Brands.