Over the last few weeks, we’ve been sharing some of the Five Secrets of Small-Cap Investing as practiced by history’s best investors. The Fifth Secret of Small-Cap Investing: Replenish Small Cap Exposure Regularly.
Successful small companies become large companies. It’s an unavoidable part of investing in small-cap stocks, only amplified by increased success in picking winning stocks.
It is also prudent to expect that more small-company stocks will stumble than the larger companies selected for a portfolio. These stocks will be sold to make way for other opportunities.
Both of these certainties require investors to be on the constant lookout for small-company prospects. On an ongoing basis, investors must refill their portfolios from the bottom up.