So what are your waiting for? Start investing a small portion of your savings in Hidden Gems which offers an opportunity to multiply your investments over a period of next 3 to 5 years.

Value investor Warren Buffett also falls in the inefficiency camp, claiming that individual investors should be able to earn 50% annual returns with small amounts of money because they have access to high-return small-cap stocks that he can no longer buy because of Berkshire’s huge asset size

Facts about Small Cap Companies

1.If you want outsized returns, you must invest in small-cap value stocks.

2.All ten of the top-performing stocks of the past decade were small caps and most were value stocks. We can almost guarantee that the top-performing stocks of the next decade will be small caps as well.

3.Most small caps underperform, so the key is either finding the few small caps that will produce the 50, 60, and 70-baggers, or instead buying the entire small-cap universe to insure that you won’t miss out on the big winners.

4.Small caps have above-average volatility and can underperform for long periods, so their outsized returns may require a long timeframe to be realized.

5.Whether small caps are inherently more risky or just inefficiently priced is undecided, but investment prudence dictates that you normally limit your small cap allocation to less than half (some say 35%) of your total equity portfolio and avoid them altogether during incipient periods of severe economic distress.

How does one know the right stock to invest in and that too at the right price which will ensure strong returns in the long term? This will be a question that will be the uppermost in the minds of most investors wanting to allocate part of their funds towards stocks. Especially in light of the heightened volatility in the markets in the past.

For instance, take a look at the period between 2005 and early 2008. During that time, there was a general sense of euphoria prevailing in India what with the country consistently logging in growth rates of 9% plus and the stockmarkets zooming to 21,000 levels. And then this optimism snapped.

The global financial crisis reared its ugly head and sent global economic growth and world stockmarkets including India into a tailspin. Suddenly there was nervousness all around. Forget bad stocks with bad fundamentals, investors in India were loathe to put in their money even in good companies available at attractive prices fearing that prices will fall down further. Then 2009 dawned, signs of recovery began to be noticeable and stockmarkets surged once again. Those who missed out on the current rally are now waiting for the next round of correction to start putting their money to work again.

The idea really is not to time the markets. That is a feat best left to speculators. For long term investors, even at present when overall valuations of companies seem on the higher side, there will still be some stocks that they can look to add on to their portfolios. These stocks if picked at the right price by following proven approaches can turn into multi-bagger opportunities.
 
At Saral Gyan, team of equity analysts keep on evaluating small cap stocks to explore Hidden Gems. Saral Gyan - Hidden Gems are the stocks with high probability to become multi bagger stocks in future and a path for our investors to create wealth through equity investments in a long run.
 
Hidden Gems Introductory offer closes on 30th June 2010, Subscribe today!
 
Read more on our paid subscription services - Hidden Gems.