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The Rule of Large Numbers
This mathematical rule is simple—it states that it’s easier to double a small number than a large number. And nowhere is that truer than in the stock market where a tiny company might double or triple its revenue in a year versus a well-known big cap that might increase its revenue by a tiny 10% over the same time period.
That’s Why Massive Stock Appreciation is Far More Possible with Microcaps
With the right Microcap you can see a stock go up five or ten times or even more in as little as 3 years. In this sector, some stocks have gone up as much as 100 times or more on their way to becoming big caps. For example, in April 2003 Apple (APPL) was a 20-cent stock—adjusted for splits. And just 3 years later it was up over 10 times. That averages over 330% per year.
You simply can’t find that kind of appreciation anywhere else in the stock market. The only time this can really happen is when a company is young and undervalued.
The problem is—that kind of appreciation potential comes with risk—far too much risk if you don’t have a good guide.
Peter’s 5 Golden Rules for Massive Appreciation Potential:
1) The company must be addressing a huge—and growing—market—and yet has little or no following so we’ll have little competition buying shares at low prices.
2) The company must own a strong technological advantage—protected by patents or trade secrets.
3) The business plan must enjoy fat gross margins with the ability to rapidly scale.
4) Management must have had previous public company experience—preferably a history of taking other companies to liquidity events at lucrative valuations.
5) I must develop a personal relationship with management–and preferably even become a consultant for them–so I can call the CEO or any other executive anytime to get answers when we need them.