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24 Aug | Investing in the Alternative Investment Market (AIM)

Anyone who’s visited Investor Trader in the past knows we err on the side of risk when it comes to investing our hard earned. A quick look at our portfolio as it stands today would appear to back that up – it’s a rag-tag band of Alternative Investment Market (AIM) shares from India, China and Australia with a leaning toward green energy. Oh, and then there’s the bank that nearly went bust! But appearances can be deceiving…

To the casual observer it may look like a portfolio on the brink but I’ve done my homework.

Since it began in 1995, over 3,000 companies have looked to the Alternative Investment Market to fund their expansion and although there’s been plenty of success stories in that time, for every small cap that’s gone on to bigger and brighter things there’s one that has stagnated or gone bust.

So why go with the risk? We like the potential of massive return that comes with risk but here’s the kicker, with some quality homework the risk doesn’t have to be proportional to the potential return. So you can have your cake and eat it too, to a degree.

By their very nature, markets are fluid, they change daily, so what may have been a great reason to buy six months ago may now be a prime reason to sell. There’s no magic formula here, no golden ticket. My advice to getting it right is to read, then go back and read some more from another source. Get your hands on financial reports, read opinion pieces, follow bulletin boards, if you don’t understand a term used in an article, get over to investopedia and get up to speed.

Literally, knowledge is power in this game and if you’re up for acquiring that knowledge then the fiscal rewards can be massive. We live in the information age where financial data is abundant so there’s no excuse for not doing your homework.

Small Cap Resources

Paul
rsvp@investorsoiree.co.uk