2012 turned out to be a great year for small-cap stock investors.
In December, the Russell 2000 Small-cap Stock index turned in jaw-dropping 3.56%, giving small-cap stocks a 16.35% return for the entire year of 2012. In contrast, the Standard & Poor’s 500 Index gained just 0.71% in December 2012, but was still able to end the year up 13.41%. While that’s an exceptional year for the overall market, small-cap stocks provided an even better rate of return in 2012, emphasizing once again that stock investors should probably actively consider smaller company stocks for their portfolios if they truly wish to maximize the returns they are likely to earn.
In the few months since we began publishing, some of our SmallCap Informer picks have rewarded subscribers well as of early January 2013. Air Methods (AIRM) is up 16.8% (including dividends), CARBO Ceramics (CRR) has earned 28.7%, and Titan Machinery (TITN) has generated a 38.7% return.
We still see lots of potential for some of our picks that haven’t shown such immediate gains, and haven’t changed our perspective on the value of long-term oriented investing even when holding smaller company stocks.
Of course, we make no predictions about what may come in 2013, but we make no adjustments to our methods or strategies.
We continue to seek out quality companies that have the potential for above-average performance.
We look for reasonable valuations when buying a stock, trying not to overpay for our purchases.
When we buy, we do so with a view to a long-term holding period.
We actively manage our existing portfolios, monitoring events that may have an impact on the long-term prognosis of our portfolio.
Finally, we sell when necessary. While we haven’t yet issued a sell rating on any SmallCap Informer stock, we are monitoring all past recommendations and will not hesitate to unload when the future looks less than bright.