Buying Over-Hyped Stocks Is Not a Plan

Headlines and hot tips lead small-cap investors away from sound decisions.

For individual investors, small-cap stocks offer high excitement — and high anxiety. Defined by smaller revenues and greater agility, small-caps can deliver attractive returns. Nonetheless, this potential comes with increased volatility. Sharp price swings test the nerve of even seasoned participants. In this environment, distinguishing between investing and speculation is the critical boundary between sustainable wealth creation and financial loss.

WHAT IS SPECULATION IN THE STOCK MARKET?

In equity markets, speculation is buying an asset based on the hope of a short-term price increase rather than an objective analysis of its business value. Speculators often rely on market momentum, charts, rumors or unproven trends.

In the small-cap universe, speculation frequently manifests as...READ ON.