Good News Bad News?

[hendi_alex]

Keep in mind that small caps are not generally extremely new nor particularly risky companies, and the cap is usually not as 'small' as the category would bring to mind. Investopedia for example defines small cap as a company between $200M and $2B in market cap. So this is not like looking for brand new unproven companies, but more a matter of looking for well established proven companies that are in a strong growth phase and which are nowhere close to saturation. I may just screen for one of the better yielding micro cap or small cap funds, and keep the weighting relatively small, so as to not affect the average portfolio yield too much. I guess that allocating as much as 20% to stocks with a growth emphasis might be a more productive route. After all, Buffet would say that it makes no sense for a strongly growing company to pay out dividends, as the funds are more valuable to both company and shareholder when reinvested in the company.

I'm just fumbling around with this idea for now, and will probably not act until the markets take the next really big double digit tumble.