General Investing - Page 2 of 2 - The Momentum Letter

Multiple Expansion and Stock Performance

Momentum Letter6 years ago4 years ago07 mins

Simply put, multiple expansion refers to the expansion of a stock’s price/earnings ratio based on investor willingness to place more value on the company’s earnings. This willingness, it needs be noted, can drive the stock price up all on its own. Consider the hypothetical J.R. Ewing Gold Company, which trades at $10 per share on a valuation of 10 times its $1 of earnings. Let’s say investor interest starts driving the share price up, and, even lacking any noteworthy news or developments, the stock rises to $25 and pushes the price/earnings ratio up to 25/1. If you’d been invested in the company at $10 per share, multiple expansion helped you more than double your money.

Determining When to Sell

Momentum Letter6 years ago6 years ago09 mins

The mere thought of selling can often stir one’s emotions even if it marks a grand-slam home run in capital gains. You might find it hard to let go of your position because you’ve likely invested time, as well as money, into it. You’ve gotten to know the company and have probably enjoyed following it on its journey towards success and profitability.

Five Thing to Look at When Initiating a Microcap Company Stock Evaluation

Momentum Letter6 years ago6 years ago013 mins

Few, if any, large cap companies will organically double their revenues within a few years, but plenty of microcaps are always in the running to double, triple, and even grow their revenues 10-fold. After all, those Fortune 500 companies were small themselves at one time, and many managed to make their microcap and small cap investors rich.

How to Mitigate Risk When Investing in Microcap Stocks

Momentum Letter6 years ago6 years ago09 mins

By managing risk in this manner with a basket of microcap or small cap stocks, you’re giving yourself the opportunity for one or more big wins—and maybe even that really big 10-bagger—knowing that should the rest of your portfolio end up with one of the other outcomes, you’re still sitting pretty and safely winning the game.

Discerning the Vision, Focus, and Commitment of Microcap Company Management

Momentum Letter6 years ago6 years ago09 mins

What does it take to successfully manage and grow a microcap company? And, as microcap investor, what qualities should you look for when evaluating a company’s CEO and other top management?

The Importance Of Politics In Mining

Momentum Letter6 years ago3 years ago014 mins

Countries, being ultimate agents of action, can declare governmental ownership of entities that operate within their borders. Once outside companies endure the risk of identifying profitable gold mines, governments can declare the mine to be governmental property, thereby hijacking the intellectual and mechanical energy deployed by the outside company and abruptly declaring full ownership of the mine.

Diamonds in the Rough

Momentum Letter6 years ago5 years ago04 mins

The Momentum Letter’s goal is bringing attention to great small cap companies and ideas related to the small cap markets.

This article is about why you should care.