The financial industry has produced a number of truisms about the marketplace over time. Market truisms are excellent because they’re generally true and easy to keep in mind. You can throw them out in informal conversations and watch your audience nod their heads in agreement. One truism obtaining a lot of press these days is about small enterprise stocks.
It goes something similar to this. Small enterprise stocks perform much better than large company shares as the overall economy comes out of a recession. And, according to the Wall Street Journal, there is proof to back again this up. That is clearly a pretty strong argument for having some quality very cheap stocks in your portfolio. You don’t want to lose out on the coming rally. The problem is you can’t wait for proof the downturn is finished before buying. Economists shall call the official end to the tough economy many weeks after it has already occurred.
By that point it will likely be too late. Penny stocks will have already made a significant move upwards. The time is to selectively add very cheap stocks to your collection now. As an added bonus, you can buy these stocks and shares right on the cheap now. Institutional investors have been selling small enterprise stocks over the board since last September. As measured by the Russell 2000 Index (RUT), small company stocks are down almost 38% within the last twelve months.
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