Happy New Year everyone

It's been great to see so many new faces doing so well in the small cap space over 2020, but stay humble

This market is vicious & will tear your eyes out the 1st chance it gets

Here are some hard learned tips from some extremely hard fought battles 1/12
Tip 1- Above all protect your capital

No matter how well you've done on paper this year, end it by at least taking your original capital off the table

Put that money somewhere secure, well away from the market

If you can bank more than your original capital, do it

2/12
Tip 2- Survive in the game (with capital) for at least two full cycles (Bull & Bear)

You'll have one hell of a journey, but the experience will be invaluable

Anyone who can survive two full cycles (& remain liquid) cleans up in the third cycle

Without fail

3/12
Tip 3- Never put >25% of your capital into one stock

This might sound punchy, but we're all gamblers at this end of the market

We're speculating, not investing

Even so, basic discipline is vital

>25% in 1 stock & you risk emotional over-commitment

That is a toxic killer 4/12
Tip 4- Learn to cut your losses.

Really can't emphasise this one enough.

If you're wrong, you're wrong.

The table below is not mine, but illustrates perfectly the damage you can do to yourself by holding on too long (also confirms the importance of Tip 3)

5/12
Tip 5- There are no protections for private investors in this market

None.

You are totally on your own here &

Even if a bunch of directors lie their arses off to steal your money there is nothing you will ever be able to do about it

Just trust me on this one 😀

6/12
Tip 6- Enter any small cap position on the basis you can afford to lose the entire stake

This is vital for peace of mind

It is, of course, important to go into any stock with an optimistic outlook (otherwise no point buying), but be able to walk away if you have to

7/12
Tip 7- Never (never, never, never, never, never) believe a director's interests are fully aligned with yours

They never can be

There are certainly directors who are trustworthy, but always remember their priority is to look after themselves (as yours is to look after you)

8/12
Tip 8- Read "Reminiscences of a Stock Operator"

If you read nothing else, read that book

So much wisdom in it, a Tweet cannot do it justice

Read it again a year later

Then again a year after that

Your trading life will be rewarded in ways you will find hard to believe

9/12
Tip 9- Meet as many directors & City professionals as you can

Learn who you're up against

Know your enemy!😀

Doesn't matter how large or small your portfolio

Too many people "on the other side" thrive behind the "impressive" mystique of the City

Pull back the curtain!

10/12
Tip 10- Learn how to exit a position - the art of averaging out

Should have put this higher, but getting out of a multi bagger can be SO much tougher than getting into one

No one can call tops or bottoms

Be happy to leave some profit on the table for the next person

11/12
Tip 11- If you find a penny stock that genuinely could deliver an outsize fundamental return, hold it

Come wind, rain or shine, those are your golden tickets

The key is to find a management team that EARNS your trust

Watch what directors do, listen less to what they say

12/12
Above all, enjoy the game

This is an incredible environment to operate in, with some incredible people to learn from

The highs can be dizzying & the lows appalling, but the trick in the long run is to stay grounded throughout

Good luck next year & happy hunting to you all!

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