A question from a reader:
Hi tim I know you usually write about large stock dividend investing but was wondering if you would share how to make small sized stock investments in smaller companies
The process for long-term investing with small-cap stocks is quite similar to how I would approach investing with many of the supersized dividend stocks that I typically discuss here. The rules of successful investing don’t really change depending on the size of the company. Long-term investing always boils down to this: finding a favorable relationship between the current price of a stock, the profits generated now, combined with a prediction about where profits will be 5-10 years from now multiplied by the certainty of that actually happening. Sure, there are other things to take into account, like accelerating dividend payout ratios or changes in the debt carried on the balance sheet, but that’s the basic question … Read the rest of this article!