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Why Small Cap Stocks? Why Now?

Why Small Cap Stocks? Why Now?. February 11, 2009. What is a “Small Cap” Stock?. First, we need to define "cap" , which refers to market capitalization and is calculated by multiplying the price of a stock by the number of shares outstanding.

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Why Small Cap Stocks? Why Now?

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  1. Why Small Cap Stocks?Why Now? February 11, 2009

  2. What is a “Small Cap” Stock? First, we need to define "cap",which refers to market capitalization and is calculated by multiplying the price of a stock by the number of shares outstanding. This is the market's estimate of the "value" of the company. Example: $0.50 x 50,000,000 = $25M Company

  3. A Penny for My Thoughts? “Small Cap” stocks have market caps of less than $1B Stocks with market caps less than $250M are often called “Micro Caps” They can also be called: “Penny Stocks” or “Juniors”

  4. Our Club’s Focus We focus on stocks with market caps below $1 Billion, that trade on the TSX, TSX Venture and AMEX stock exchanges.

  5. Why Small Cap Stocks? “...despite the conventional wisdom, larger stocks as a group haven't provided as much shelter lately as investors had hoped.” excerpt from The Wall Street Journal (Feb. 2009) “In past cycles, small caps have jumped as much as 50% in the first 12 months of a market recovery.” -Nancy Tooke,Eaton Vance Small-Cap Growth Fund

  6. Why Small Cap Stocks? Below 200 day moving average Oversold? 5-Year chart of TSX Venture Exchange

  7. Our TSX greatly outperformed the US Large Cap Stocks Why Small Cap Stocks? Oversold? 5-Year chart of TSX vs. S&P 500

  8. Peter Schiff, president of Euro Pacific Capital Inc. • Predicted the market meltdown • Recent comments from Fortune Magazine, Jan 2009 Recent Comments in the Media ...his favourite stocks right now are all small - or very small - issues traded on foreign exchanges; he avoids big global players that trade on U.S. exchanges because they tend to be well-known and thus fully valued, and have too much exposure to the troubled U.S. Economy...

  9. Harry S. Dent, Jr., Founder and CEO of HS Dent • Best selling author on economics Recent Comments in the Media ... Small cap stocks outperformed large cap stocks 6 to 1 in cumulative returns from 1958 through 1983. The best time to buy small caps was after the 1974 crash. Investing in small cap stocks is a good choice in the Deflationary Shakeout or depression era and directly following a market crash...

  10. Investment Funds Are Out – Getting Back In! • Less dependant on the US Consumer • No bailout money – Survival of the fittest! • No soft landings – Very oversold • Not as scrutinized as mid and large caps • In Canada, heavily weighted towards commodities which have fallen to multi-year lows in last 6 months • Risk is now very cheap compared to 12, 24 or 36 months ago Top Reasons Why We Like Small Cap

  11. Good share structure • Well-managed • Financially strong • Tangibly undervalued • Dominant in their market niche • 6 to 12 months of catalysts What to Look for in Small Cap Stocks

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