In the investment world the big guys have a number of advantages. Most of those have to do with information. They have the time, money and resources to get lots and lots of information about their investments. It’s very difficult for the small investor to match that. But the big guys also have an Achilles heel. What’s that you ask? The answer is that they are big guys. And as big guys they by definition have to invest big money.
Let’s say the average big guy has $1 billion stock portfolio he’s working with. He finds a really cool stock (XYZ Corp.) with a market cap of $25 million. Well even if he buys 10% of the company, that’s only $2.5 million, or 0.25% of his $1 billion. And it might take him many weeks to accumulate that many shares at a reasonable price. It’s much easier for him to buy $50 million worth of Microsoft or GE, which the market won’t even notice. To a great extent the big guys can only lust after XYZ Corp. They have to buy big stocks because of the amount of money they have. For the little guys, that opens up opportunities. You don’t have that problem. You can buy enough of XYZ Corp. to fill out your portfolio without roiling markets.
Of course small stocks are not always the best choices. But you have the advantage of being able to buy almost any listed stock big or small, something the big guys can’t do. Take advantage of your advantage, the big guys don’t hesitate to use theirs.