Stock Investing For Dummies, 6th Edition

Chapter 14

Small Cap Stocks, IPOs, and Motif Investing

IN THIS CHAPTER

Surveying small caps

Considering initial public offerings

Discovering motif investing

If you’re an investor (or a speculator) who wants to use a relatively small amount of money to buy stock in a single company or a set of companies (much like a mutual fund but requiring less money), this chapter is for you! Many investors dream of buying a cheap stock (referred to as micro caps and small caps) and watching it become a real investment powerhouse. It can be done, but you need to do it right; the first part of this chapter addresses this topic.

Another consideration is investing in a company’s IPO (initial public offering). The right IPO can make you a fortune, but too many people lose money because they miss some crucial points (which, of course, I cover here).

One way to potentially turn a small grubstake like a few hundred dollars into big money is through a relatively new innovation called motif investing. Motif investing gives you the ability to invest as little as $250 into a batch of stocks and/or exchange-traded funds (ETFs) that have a particular theme or a specific outlook that you expect to occur. You can ...