Picking Small Cap Stocks

Ms Teh of Business Times polled 5 stock broking firms for their respective top 5 picks among the small cap companies in Singapore.

After 1 year since that fateful poll, she presented the following conclusion.

1. Avoid stocks that are recommended by many analysts. Too many investors have already stocked up on the counter. Limited upside should be expected.
2. Be careful in chasing after recent big winners unless you are familiar with the industry.
3. But don't dimiss all recent winners too. You maybe able to ride on the strong upside momentum.
4. To appreciate the fact that picking a winner is difficult and staying with the winner is even more difficult.

How do you know you have done well?

When you "beat the market" , then you have done well.

ie. when your return exceeds the respective indices or when your return exceeds cost of funds and rate of inflation.

Happy investing... :)

Reference - "The art of picking small cap stocks", BT Oct 14-15, 2006 pp 6.