Other times, there is no answer, at least none you’ll be able to pinpoint. Or it could simply be due to mere speculation about something impacting a company in a similar market. Or an automated media feed misreads a press release and posts a misleading headline (this happens with earnings releases at times). Or it could be a newsflash sent out over a Bloomberg terminal that the average investor does not have access to. The reason might be buried in a press release, an earnings conference call or SEC filing. The honest truth is that often there isn’t a clear reason for a small-cap stock’s move. And it’s especially frustrating for those who want a quick answer to the question of whether the stock is a buy, hold or sell. This volatility can be absolutely maddening for those who are new to small-cap investing (and even to those who aren’t). Sometimes, great small caps can pop 10%, 15%, or more in a single day. This one stuck with me because it gets to the heart of one of the defining characteristics of small-cap stocks: many are young, attractive investments and tend to move around a lot!įind out which stocks you should buy this month to make money in this volatile market. He must “look for elephants,” which are, of course, the large caps. But that is the universe I must live in.”īuffett was saying he can’t buy small-cap stocks (the mosquitoes) because he has too much money. It may be that the elephants are not as attractive as the mosquitoes. He said, “If I was running $1 million today, or $10 million for that matter, I’d be fully invested … It’s a huge structural advantage not to have a lot of money … The universe I can’t play in has become more attractive than the universe I can play in.
But for me there’s one obscure quote about the attraction of small-cap stocks that sticks in my mind. There’s always a lot of interest in what Warren Buffett says, and what his company Berkshire Hathaway (BRK.A, BRK.B) does.
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