investing: small/mid-cap, value

Hey so it seems like nothing to much is going on here but I hope we can change that.

Zbb I agree with the assumptions listed at the top of your post with the largest potential gains being found in small/mid cap stocks, and furthurmore value and mid-cap stocks.

What I am trying to do right now (as a young investor) is looking for ideas on how to craft a portfolio, which stock/ETF's to choose and how to properly diversify. I would also love to hear to seasond investors experiences!

Thanks

accountingbyday,

You are correct to have a low turnover for a smaller account that can get eaten by commissions. However, you should never be paying high commissions. There is a lot of competition out there amongst the online brokers and you can find some low commissions for an account over $10,000. (TradeKing, Zecco, etc)

If you are thinking of value stocks that pay a great yield, think of stocks like Phillip Morris. It currently pays almost 5% at 14 times earnings. They are selling a legally addictive product. It's a growth story in emerging markets where smoking is an upward trend. Also, unlike the U.S.A., there are no litigators and surgeon's general chasing them around. They have an absolute death grip on their pricing and it's a defensive stock because no matter what the economy, people are going to smoke their Marlboros.

Accountingbyday,

Its funny becuase I was also thinking of a four stock portofolio to hold over a number of years, I have about 5,000 set aside for this purpose. I was just hopeing to pick four stocks that would allow my portfolio to be properly diversified (becuase i am looking for long term-growth). Does anyone have any idea on diversification?

-and Philip Morris sounds fantastic with several good points by moneyrunner

Money,

95% of the time you are correct about the fees. I despise them and consider them to be my worst nightmare. However, my this $ sits in a self-managed portion of my current employers 401k. It really sucks and my hands are tied for this portion of my account. Fortunately for me, this will not be somethig I rely exclusively on for my retirement funds.

I will look further into Phillip Morris. Obviously, I like the dividend, but anything that routinely kills people and is subject to massive lawsuits always scares me a little.

The thing about PM is the fact that it is international. It sells outside of the USA away from lawyer-land. And truthfully, the whole blame game of look what company X did to me is played out. It may have worked a few decades ago, but people understand risk and the fact that it is their sole decision. What is next? Suing Constellation Brands because you are an alcoholic?

PM just reported earnings today and beat expectations. Don't be afraid of a little profit ;)

My favorite little under the radar growth stock is JBSS. has not done much in the past 3-4 months. Icing on the cake is that Rentec is long the common. Other good ideas for year end:

USU ATVI PTV GS INTC LLL

Take a look and come up with your own valuations. Let's see if we can't get some good discussion going. There's also a lot of good stuff on seeking alpha. You can find smaller managers who are doing well but still under the radar. Examples of guys I think of:

http://seekingalpha.com/author/bret-jensen/articles

I've also got some insights courtesy of my overpriced education to add to the traditional things you know about small caps and value.

High CFO to price is the best predictive factor. Look for companies in the top 3 deciles of CFO to price. Also note analyst coverage is useless, along with S&P ratings. High short interest is a red flag along with high accruals.

Anyone else had some quant-esque training like me that cares to add to the "general factors to look for/avoid" to help narrow down the list of investment candidates?

Hubristic,

I love uncommon indicators like CFO to price and others that fly under the radar of most money managers! Common indicators are often played out and distorted when everyone is watching. Nobody should obviously make an investment decision solely on certain ratios, but it adds to the argument.

Does anyone else have any uncommon economic indicators or financial ratios they target that are out of the public's radar?

can i get the ball rolling with (as far as i'm aware) a fairly widely-known strategy

• small-caps earn better than large-caps in the long run
• mid-caps earn better than large-caps in the long run
• value trumps growth

and small/mid-cap, value, kicks ass

in fact, the differential in return between growth and value stocks in the small cap space is huge

as an example, over the past 10 years, the iShares 400 mid-cap value ETF has earned gone up by nearly 90%. compared to a loss of (off the top of my head) 20% for the s&p 500

what does everyone think? anyone want to refine? or share their own experiences?

Problem is what happened in the past doesn't always repeat into the future