Accuracy counts in investing. Unfortunately, perfect accuracy is a pipe dream. That's the fine print. But big winners erase inevitable losers.
Go hard or go home
Although you will lose money on positions, you still have to be sure about your stocks.
This is particularly true among small caps. Because small companies are more unpredictable than the big guys, even the best small-cap investors are elated with 50% accuracy.
Don't let that number scare you. Small caps are a must because they can help put your portfolio far ahead of the market.
Ride the 20-bagger
In Motley Fool Hidden Gems, Tom Gardner recommends companies he believes can increase 10 to 20 times in value over 10 years. Not all will. That's the rub.
But if just one pick is up 2,000% in 10 years (not impossible since one is already up 350% in two), that's like all 180 recommendations starting 11% ahead of the market. The effect is even more profound in a smaller portfolio.
Don't think these incredible opportunities exist? They do. Genentech (NYSE:DNA), now a $100 billion company, started as a handshake between a venture capitalist and a biochemist in 1976. PepsiCo (NYSE:PEP), now a $100 billion company, was the back of a New Bern, N.C., drugstore in 1893. UPS (NYSE:UPS), now an $85 billion company, was a $100 Seattle start-up in 1907. Best Buy (NYSE:BBY), now a $22 billion company, started in St. Paul, Minn., with first-year revenues of $173,000 in 1967. The company changed its name to Best Buy in 1983, and a $1,000 investment two years later would be worth more than $250,000 today.
Tomorrow's giants are out there. Is $400 million FlamelTechnologies (NASDAQ:FLML) the next Genentech? Is $2 billion Hansen Natural (NASDAQ:HANS) the next PepsiCo? Is $1.6 billion GameStop (NYSE:GME) the next Best Buy?
Hidden Gems can help you find out. Click here to learn more.
Tim Hanson does not own shares of any company mentioned. Flamel Technologies is a Motley Fool Hidden Gems recommendation. Best Buy and GameStop are Motley Fool Stock Advisor recommendations. No Fool is too cool for disclosure ... and Tim's pretty darn cool.
