These Will Be the Market's Next Big Movers

Lately, everyone from my best friend to the French woman who cuts my hair has been asking me what I think they should do with their money.

So what am I telling them?
First off, that I'm no expert, and that there's no telling whether the market can continue along this trajectory without a serious pullback. Second, I'm adding that they should ignore anyone who tells them otherwise.

And finally, I'm saying that although he's lost his title as the world's richest man, I still believe in Warren Buffett and the process that made him rich -- buying great companies when they're selling at good prices.

That's why I recommend that people who don't own any stocks take the time to check out steady-as-she-goes stalwarts like ConocoPhillips and Procter & Gamble.

Each has a rock-solid, world-renowned brand, has already weathered severe recessions, and will almost certainly be around for decades. Not to mention they both have very straightforward business models and sell products that the world simply can't do without.

Even better ...
As you probably can guess from my first two recommendations, I'm a big fan of companies that pay you to own them, which is why, over the past couple of months, I've personally been loading up on high-yield dividend payers including Altria and AT&T -- both of which have yields north of 6%.

I've also been spending a lot of time researching master limited partnerships like Kinder Morgan Energy Partners -- which pay out monster dividends and have major tax advantages over regular dividend payers.

Swinging for the fences
Of course, like me, most of the folks asking for my advice are on the younger end of the investor spectrum. And for better or worse, they all want to know which stocks will make them rich beyond their wildest dreams.

Granted, the names I mentioned earlier are all great companies and solid investments, but the fact of the matter is that they would all have to pack on tens of billions of dollars in value just for their shares to double. Meanwhile, the market's next big movers will almost certainly be small companies that most investors have never even heard of.

For proof, I pull up a list of the top 10 percentage gainers of the past 52 weeks ...

Source: Google Finance.

Notice anything?
That's right. The market's biggest movers are all small companies. And this is no isolated incident. Just take a look at the 10 best-performing stocks of the past 10 years.

Now you can see why my Foolish colleague Anand Chokkavelu says small-cap stocks are the stocks Warren Buffett wishes he could buy, and why I tell everyone who asks that small caps are your shot to score big.

The nail in the coffin -- and your key to riches
Along with being small and obscure, these stocks are, for the most part, completely ignored by Wall Street.

This means there's a much greater chance that the investing world misunderstands their true value -- giving you a shot to secure some amazing gains once everyone else begins to catch on. It's also exactly why Motley Fool co-founder Tom Gardner started our signature small-cap investment service, Motley Fool Hidden Gems.

If you'd like to see all the stocks the Hidden Gems team is recommending -- including its "Buy First" picks -- and follow along as it invests $250,000 of The Motley Fool's own money in a portfolio of today's top small-cap stocks (18 of 21 positions are in the green, with six already up more than 50%), I invite you to take a free 30-day trial of Hidden Gems.

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This article was originally published April 24, 2009. It has been updated.

Austin Edwards owns shares of Altria and AT&T. Procter & Gamble is both an Income Investor selection and a Motley Fool Pro holding. The Motley Fool is investors writing for investors -- and, as always, we have a disclosure policy.