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, (Nasdaq: CTRP), 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 December 2005, the market judged that its entire business was worth around $922 million.

That's a fairly substantial amount for individual investors, but for a fund like Fidelity's Contrafund (FCNTX), which has $80 billion in assets under management, it's pocket change.

In fact, $922 million works out to be approximately 1.2% 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:


Market Cap
(in Billions)

Shares Held by Fund

Lockheed Martin



Disney (NYSE: DIS)






Wells Fargo (NYSE: WFC)



Intel (Nasdaq: INTC)



Coca-Cola (NYSE: KO)



While all those firms may well make fine investments, they're very large companies. Do you really think Coca-Cola will quadruple in size over the next few years and become a half-trillion dollar company? It may get there some day, 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, Ctrip has quadrupled in value, skyrocketing some 323%. 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, noobligation 30-day trial.

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

At the time of publication, Fool contributor Chuck Saletta owned shares of Intel. Intel and Coca-Cola are Motley Fool Inside Value selections. Ctrip is a Hidden Gems pick. Disney has been chosen by Motley Fool Stock Advisor. The Fool has a disclosure policy.