Me, I was working on a column a lot like this one. In fact, it was just like this one. That's because, in September 2003, I stumbled on two points that, looking back, could have helped you make a lot of money.

And you can still cash in
Which is why I'm repeating them right now: (1) I still don't believe the stunning rally in small-company stocks is kaput (and even if it is, I don't think you should consider scaling back), and (2) if you don't own small caps in your portfolio, don't assume you're covered by your mutual funds. Not even if they are so-called total market index funds.

I'll explain why in a moment. But first, back to September 2003, when a lot of "experts" were already clamoring that the money had been made and the small-cap rally was cooked. I jumped at the bait (and I hope you did, too).

I confessed to having loaded up on the iShares S&P SmallCap 600 Index (IJT) the previous January -- at around $65 for a quick 25% gain. More importantly, I suggested that you could buy this low-cost small-cap growth index yourself and still make out. If you had the guts to buy on Sept. 26, 2003, you're sitting on a 65% gain. Well done.

Why you should keep it small
I won't rehash my entire argument for why I thought small caps (especially small-cap growth) weren't done, but a few points are worth touching on briefly. First, we appeared to be coming out of a business recession, and small-cap growth stocks are notoriously hot during recoveries. Second, we hadn't nearly made up the ground lost during the '90s mega-cap love fest.

And don't sleep on this last point. I catch grief for constantly pointing out how difficult it would be for a massive operation like Dell (NASDAQ:DELL) to double its $50 billion in sales, no matter how much I love the company. But there may be something else. Even if Dell did double its revenues, the stock could still let you down.

After all, revenues and earnings for giants like Dell and Wal-Mart (NYSE:WMT) are going up and have been -- to the tune of 16% and 9% for each company -- annually for the past two years. In fact, you would be hard-pressed to ask for more out of management at either company. Yet the stocks have been dogs since we last spoke in September 2003. And that, my friend, is what I call an uncomfortable morning after.

And we're just getting buzzed
But even if I am irrationally exuberant about small caps as a group, it's not the end of the world. In my view, their advantages as small companies extend beyond investor moods and relative valuations. By nature, small companies are simply more adaptable to change and better poised for explosive growth than the handful of behemoths we hold in our "total market" funds.

Which is why I'm a fan of Tom Gardner's Hidden Gems approach. For one thing, the Hidden Gems team picks stocks using a bottom-up method. And when you focus on specific companies, you don't need to rely on across-the-board strength in a sector or investment style. And when you focus on small caps, you get another bonus benefit -- if you know how to play it.

There's less information available about smaller companies, making the market much less efficient when it comes to smaller, more thinly traded stocks. Moreover, as Tom is fond of explaining, the lack of interest in these stocks decreases the chances you'll get caught up in a crowded auction-house bidding war like the one that broke the bank for large-cap investors in 2000.

Finally, the problem with your mutual funds
Please don't assume you're covered because you own broad market stock funds, even so-called total market funds. In fact, these index funds are typically dominated by large-cap growth stocks. Which means that you're really overweight in $350 billion General Electric (NYSE:GE) and $275 billion Microsoft (NASDAQ:MSFT).

Worse, because the index is market-cap-weighted, your dog is getting wagged by its tail. How so? Well, add in $240 billion Citigroup (NYSE:C) and $190 billion Bank of America (NYSE:BAC), plus a handful of other monsters, and just 10 stocks make up more than 15% of your "total market." In other words, you may think you own an equal chunk of 500 stocks, but you've really got a wedge of No. 1 and a sliver of No. 3,761 (whatever that is).

That's why a big sell-off in $115 billion Intel (NASDAQ:INTC) sends you running for the Alka-Seltzer, while the best day in the history of No. 3,761 (whatever that is) barely buys you lunch.

How to get on board
Even if you agree with the Wall Street Wise that the drought for mega caps is over, you should still take a look at small-cap stocks. History proves that many (if not all) of tomorrow's Goliaths are Davids today. And unlike Dell, an extra $1 billion in earnings could propel their investors into a whole new lifestyle and tax bracket.

If that sounds like some sweet action to you -- or if you just want to diversify across the market-cap range -- you should give Hidden Gems a holler. Tom and his analysts have already turned up six stocks that have doubled in value or more. And he has me convinced that a 10-bagger or two might be on his buy list already.

If you're looking for small-cap ideas, that's a fine place to start. In fact, you can check out all Tom's picks and the full write-ups the instant you join. If you're not completely blown away by what you see, there's no obligation to subscribe. To have a look, click here.

Paul Elliott promises to keep you posted on the progress at Hidden Gems. As of Mar. 23, 2006, the picks are up 38.5%, versus 14.5% if you'd bought the S&P 500 instead. You can view them all on the Scorecard with your free trial. Paul owns shares of Bank of America.Microsoft is an Inside Value pick, Bank of America is an Income Investor selection, and Dell has been recommended in both Stock Advisor and Inside Value. The Motley Fool has adisclosure policy.