Business Standard

Small-cap investing strategy

Always keep in mind that it can rise or fall by 20-40 per cent in a given year

investment, small cap, mid cap

Illustration: Binay Sinha

Devangshu Datta
After a long period of bearishness, there’s been a revival of investor interest in small-cap stocks. Many investors are re-entering that segment. There are many arguments for, and against, small-cap exposure. 

Small-cap investing is one of the most difficult and potentially rewarding styles. It’s hard because small companies don’t have track records and there is usually little information. They are also very dependent on one or two individuals for growth. There usually isn’t large institutional coverage, or institutional stakes. 

This means wild swings in price and unpleasant surprises when you discover that the management isn’t as ethical as it should be. Nobody
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

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First Published: Sep 29 2019 | 11:31 PM IST

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