The Best Investments Available to Ordinary Investors

They give you nasty nicknames like "Joe Oddlot" and call you the dumb money in the market. They say they're the sharks in the dangerous waters of the stock market and you're their prey. Worst of all, they can scare you into paying exorbitant sums of money to manage your investments for you.

Who are they? Mutual fund managers. And they manage a huge amount of the money invested in the market.

What they don't want you to know, though, is that their bravado is largely just an act. In reality, they're jealous of you -- and extremely scared, too. They're scared that you'll find out the truth about the tremendous advantage you have that is completely off limits to them.

Your unstoppable edge
The great irony of mutual funds is that the very size that gives them their power also gives them their greatest vulnerability. They're simply too big to take advantage of many of the greatest opportunities available in the market.

Take, for instance, Buffalo Wild Wings (Nasdaq: BWLD), one of the picks Fool co-founder Tom Gardner made for our Motley Fool Hidden Gems small-cap investment service. When he first uncovered the company in July 2004, the market judged that its entire business was worth around $213 million.

That's a fairly substantial amount for individual investors, but for a fund like Fidelity's Contrafund (FCNTX), which has $71 billion in assets under management, it's pocket change.

In fact, $213 million works out to be approximately 0.3% of the fund's current worth. Contrafund could have bought out the entire company and watched its worth skyrocket, as it has these past few years, yet the impact on the fund would have been minimal.

Where they're stuck -- and you're not
As a result, Contrafund, and other giant funds like it, are stuck fighting over some of the largest companies out there. Its holdings include giants like these:

Company	Market Cap (in Billions)	Shares Held by Fund
Allstate (NYSE: ALL)	$27.75	4,587,844
American Express (NYSE: AXP)	$53.17	12,953,150
Research In Motion (Nasdaq: RIMM)	$76.03	9,441,809
Merck (NYSE: MRK)	$82.90	17,615,250
Nokia (NYSE: NOK)	$106.90	14,838,486

While all those firms may well make fine investments, they're very large companies. Do you really think PepsiCo will quintuple in size over the next few years and become a half-trillion dollar company? It may get there someday, especially as the developing world acquires more disposable income and a taste for Western indulgences, but it likely won't happen anytime soon.

On the flip side, since it was first selected for Hidden Gems just a few short years ago, Buffalo Wild Wings has skyrocketed some 158%. That's your major advantage over Wall Street's giants: You have the ability to buy shares in the best up-and-coming small companies on the market -- and actually feel the benefits of their success.

If you need a few ideas to press the tremendous edge you have over the biggest investors around, join us at Hidden Gems with a free, no obligation 30-day trial.

This article was originally published March 8, 2008. It has been updated.

At the time of publication, Fool contributor Chuck Saletta owned shares of Merck. Buffalo Wild Wings is a Motley Fool Hidden Gems selection. American Express is a Motley Fool Inside Value pick. The Fool owns shares of Buffalo Wild Wings. The Fool has a disclosure policy.