One of Jesse Livermore's favorite books was “Speculation As A Fine Art and Thoughts On Life” by Dickson Watts (1880)

Dickson Watts was at the height of his powers as President of the New York Cotton Exchange when Jesse Livermore was born. twitter.com/i/web/status/1… “You have opened the tomb of a great man. His name, his hooks and his exchange have almost vanished... there is not a copy in the Library of Congress or The New York Public Library. This was one of the few books written on speculation by a successful speculator.”

I get asked quite often:

How do you research a microcap stock?

This is a great question. It is a difficult question to answer. Microcaps are much different than largecaps. But @michael2017l and I were up for the challenge. twitter.com/i/web/status/1… Many of the best investors ever started in microcaps. Many of the best performing stocks ever started as microcaps. Most of the best performing stocks over the last 10 years came out of the microcap ecosystem. Finding great companies early has never gone out of style.

In the book, The Art of Execution, portfolio manager Lee Freeman-Shor invests $25-$150 million in 45 of the world’s top investors. His instructions to them were simple as there was just one rule. They could only invest in their ten best ideas. Over several years he tracked their positions, trades, performance and was amazed at what he saw. He identified both good and bad habits and divided the investors into groups – Rabbits, Assassins, Hunters, Raiders, and the most successful group, the Connoisseurs.

Some BuzzBitts:

Gas Spending – Last week, 7.8% of total credit card spending were charges for gas vs. 6.4% in February. All debit and credit card spending increased 9% over the year ago period – Dow Jones News Longevity – The average American man lives to age 76 vs. 81 for the average woman. Why? Men are more likely to smoke, drink excessively, be overweight, less likely to seek medical help early and also more likely to be non-adherent to medical treatment - TIME

From Buzz Heidtke newsletter:

Below is a great @MicroCapClub write-up on my friend Fred Astman (1922-2013), who passed away in 2013 and was one of the top small cap value investors in the country. I met Fred around January of 1978, when he was running a small-cap mutual fund. Fred started out as an accountant before moving to the investment business. The best investment advice he ever gave me was to never invest in a company with a negative net worth – all companies at some point have a round of bad luck and the strong will survive but the others wont

A great book:

In 1872, right before he hit the big bonanza, Mackay warned his wife that the Consolidated Virginia could easily consume all of their money.

His wife asked what would happen if it did.

Mackay replied, “We’ll go broke and start over.”

amazon.com/Bonanza-King-M… In his day, John Mackay’s story (1831 – 1902) was the most beloved rags-to-riches story in America. He’d risen from the infamous Five Points, the world’s most notorious slum.

Some Buzzbits:

52% of U.S. homes sold in January fetched more than their list price, up from 40.2% a year earlier. Buyers are anxious to purchase a home ASAP because as rates rise, they won’t be able to afford the homes they are looking at now .. – Redfin The U.S. has more oil inside its borders than all the proven reserves on earth. Here are the official estimates: 8x more than Saudi Arabia, 18x more than Iraq, 21x more than Kuwait, 22x as much as Iran
– Forbes

One of my favorite email subscriptions is Buzz Heidtke's "Buzz Bits". He sends it out Friday after the close.

Used Cars – The average used car sold for $29,594 in January, up from $22,676 last year, a 30% increase. The average price of a nine-year-old car rose 43% in a year. Lumber Prices – are about 3x their average pre-pandemic price. The National Association of Home Builders estimates the recent price jump added $18,600+ to the price of a newly built home – CNBC.com

We study great investors like Nicholas Sleep and Qais Zakaria from the now closed Nomad Investment Partnership and think to ourselves, “I’d be famous too if I just held Amazon and Costco the last 15 years”. But you didn’t and it wasn’t easy. They bought Amazon aggressively in 2005 around $30 per share. The stock went to $80, and then fell back into the $40’s during the 2008-2009 financial crisis. I’m sure they would tell you being up 150% in 2 years to being up 50% in four years in a position isn’t fun or easy.

“If there are nine rabbits on the ground, if you want to catch one, just focus on one.”

– Jack Ma

#focus “I’m no genius, but I’m smart in spots, and I stay around those spots.”

– Tom Watson, Founder of IBM

Don’t compare yourself to others. You aren’t running their race. You are running your race.

Terry Smith, founder and CIO of Fundsmith, compares successful investing to the Tour De France.

👇 👇 The most prestigious cycle tour is the Tour de France. Been run for over a 100 years. It’s never been won by somebody who won every stage. And it’s never going to be won by somebody who won every stage.

It’s cool to see 53 year old Steve Stricker tied for 2nd going into the third round of the Phoenix Open

Here is a cool story about him

👇 👇

In 1997, a 30 year old Steve Stricker was paired for the first time with the 21-year old phenom Tiger Woods. 2/ After the round, Stricker would tell his wife (also his caddie) he was thinking about quitting the game. When he played Tiger he saw a person he couldn’t beat.

One of my favorite books

amazon.com/Great-Beanie-B… Forbes estimates that Beanie Baby creator Ty Warner’ net worth is $2.7 Billion. This is an amazing achievement considering a bulk of it was earned during a 3-year time frame selling a $5 per unit stuffed animal.

Frank Perdue took Perdue Farms, a small local company his father started, and grew it into a multi-billion-dollar business.

Mitzi Perdue tells this amazing story about her late husband:

👇👇👇 1) Frank had a tremendous head for figures. He treated numbers the way a doctor would treat an MRI: numbers enabled him to see and understand what was going on deep inside the business, plus numbers were a very quick way of detecting if something was going wrong.

New Post

I Hope This Inspires You

microcapclub.com/2020/09/i-hope… You don’t hear much about full-time private investors because publicity doesn’t benefit them. In fact, publicity hurts them. Full-time private investors like the fact that even family and friends don’t quite know what they do for a living.

Microcap investors are mainly retail investors. Some of the best microcap investors I know are small business owners. They understand the complexity, volatility, and nuances of running a small business. Microcap isn’t an institutional asset class, it’s an entrepreneurial one. Most "financial professionals" think you're dumb for investing in these small companies, but that is only because they can only buy them after they go up 10x, are 70% institutional held, and have 10 analysts covering them.

The financial machine loves lemmings.

My Biggest Investing Mistakes:

1.) Kissing Frogs -Rationalizing my way into mediocre investments

2.) Not selling when I knew the story changed

3.) Selling long-term winners to buy losers 4.) Not giving winners enough room to exceed your expectations because the great ones will

5.) Making excuses for bad capital allocation

6.) Deploying capital quickly after a big win

7.) Trying to make money back twice as quick after a loss

I've always loved Druckenmiller because he says the complete opposite of what they teach you

"The few times that Soros has ever criticized me was when I was really right on a market and didn't maximize the opportunity."

Stanley Druckenmiller "The first thing I heard when I got in the business was, 'Bulls make money, bears make money, and pigs get slaughtered.' I'm here to tell you I was a pig. And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig."

I learned investing by losing money, making it, losing money, making it. This is when you develop a set of experiences that are unique to you that define your investment strategy. Don’t be afraid to learn investing by investing. Concentrating on just a few stocks/businesses early in your investment journey is a great way to learn investing because the outcomes are extreme. You learn what you don't know quickly. You feel the intense greed of a win, and the anguish of a loss.

Our Top Articles on @MicroCapClub in 2019

1./ What is Chasing You?

We are all being chased by something. That thing is put there for a reason. You weren’t put on this Earth to be average.
microcapclub.com/2019/10/what-i… @MicroCapClub 2./ Unbreakable

If you are a stock picker you have 10x the emotional load of a passive investor. You have to be a rock. You must be unbreakable.

microcapclub.com/2019/06/unbrea…

I’m looking forward to watching these people crush it in 2020

@morganhousel's book debut
@BrentBeshore scaling a hard to scale strategy
@jposhaughnessy's podcast
@patrick_oshag with Canvas
@Greenbackd scaling his brands
@AliBHamed - continuing to define generosity

Continued.. @ArtkoCapital tweeting about microcaps more and Tesla less 😂
@iddings_sean applying IF principles to business
@MikeDDKing continuing to push our MCC mission
@Brad_Johnson Great podcast
@SJosephBurns on twitter and elsewhere
@dmuthuk continues wisdom

Continued...