Value Microcaps Motherboard

[10 bagger]

OT: Great read that is dated...

Warren Buffet's Mantra: "If you want to achieve "truly market-crushing returns" - Concentrate on Small Cap Stocks.

The 101-year-old pink sheets market, so named for the pink newsprint on which quotations used to be published, typically deals in the over-the-counter stocks of very small companies, and even though most refer to it as the back alley of the stock market, just as investing in lesser developed neighborhoods in US real estate can and has delivered spectacular returns in recent years, the Pink Sheets are quickly gaining increasing respect and credibility each and every day as an efficiently electronically quoted market Worldwide, that more recently now also includes Level II quotations, that makes investing in this area as easy as Nasdaq.

Pink Sheet or OTC Buys and Sells can be executed in seconds and their is no apparent difference between this and the OTC Bulletin Board, the only difference with the Nasdaq being the Market Depth available there as defined by order and position size.

Back in the heady days of 1999, in an interview with Business Week, Warren Buffet stated: "If I was running $1 Million today or $10 Million for that matter, I'd be fully invested. Compared to running Billions, it is a huge structural advantage not to have a lot of money. "I think I could make you 50% a year on $1 Million. No, I know I could. I guarantee it". With that kind of statement, it's no wonder he is the most successful stock market investor of all time. He went on to say: While having Billions of Dollars to invest is a rather wonderful problem, Buffett is clearly handicapped by Berkshire's colossal size. His message to small investors is direct:

If you want to achieve "truly market-crushing returns": Concentrate your research on the universe of small-capitalization stocks. As his colleague Curt Morrison pointed out in a recent article, illiquid stocks have outperformed liquid stocks by 2.1% annually over the past 40 years. That is one hugely compounding advantage to have that can accelerate turning thousands into Millions. These results, of course, make perfect sense. For various reasons, large investors cannot invest in small, illiquid stocks, and with fewer smart people looking at a stock, there is a greater chance of (discounted) mispricings. He continued: "In my experience, the smallest and most illiquid stocks tend to trade on the pink sheets". It may surprise you, then, that Warren Buffett has been known to shop in the pink sheets. In fact, any investor willing to look hard enough will find many fine businesses among the weeds, and when small capitalization's, illiquidity, and the stigma associated with the pink sheets intersect, they form a trinity of market inefficiency. And that is what this business is all about: Exploiting these market inefficiencies and finding uncommonly undervalued stocks. That's how we've managed to deliver our recent track record, over a relatively short time frame, with success.