Oh
Welcome to trade ideas. I'm Jake Merle sitting down washed away Dan co-founder of geo investing Maj
It's great to have you on the show for your very first real vision interview. Thanks Jake
I really appreciate the time you take to have me here today, really?
look forward to talking about my caps today and the advantage is investing in them from my perspective and
How our company geo investing has been playing a part trying to bring awareness of the space
So based on my knowledge of micro caps, they seem to have a pretty bad reputation
For example, they're pretty illiquid and people refer to them as penny stocks. There's a lot of pump and dump schemes
There's a lot of fraud so Maj, do you think any of those concerns are valid? They're extremely valid the way you point out
They're valid at any market cap and run, you know become big cap small cap layer camps nano caps
you can have fraud of any type of
level of playing field in that universe
so it's really important just to do your homework and understand whatever you're investing in but because of these stereotypes that
Financial media places on this space. It creates a lot opportunity to find like great companies and we'll talk about that later, but
You'll be surprised at some of these incredibly generated generated companies and profit companies that trade in the OTC that are micro caps
And it's not the size of the wire cap in terms revenue
so if
You're willing to look a little deeper into little homework. You can find some incredible value in that area
So if perhaps the illiquidity fears and the fraudulent fears are a bit overblown
What are some of the you know positive attributes for micro caps? What are some of the advantages to owning them?
Let me see. I don't think they're overblown. They're definitely there. Yeah, but
What's overblown is a Cammisa conception that there aren't good quality companies in the space
so I think that's really important to
understand that looking in places where other people aren't looking or competing just
Makes logical sense to be looking for these ideas and the revelatory environment has changed so much so much since 2008 crisis
That it's making it harder for a lot of retail investors
Institutional investors to invest in the space and why is that? Well, you have look you have there's it's interesting
Since the recession
You would think that people are more risk averse
So they want to take less risk
So what has happened actually is there's been more of a appetite for risk in my opinion and it's really kind of affected the way
that
the marcab universe has evolved over time so
People are adverse to holding stocks long-term anymore that combined with growth and ETFs index funds people
You know longer-term and people are investing in index funds
The because of the 2008 global recession, you know, yeah, this is all in the back of our heads and you
know the second is a
Volatile moment in the market we all get scared people sell panic. So where everything everyone's thinking shorter term
So what ends up happening is a lot of investors start craving pump and dumps biotechs the sexy stories that promise you short-term returns
cannabis
Blockchain so that it's counterintuitive. So what happens is these stocks are getting a lot more momentum
And there's always much coin to go around in the market
So when you're talking about the market universe lot of these what I call tier one where cap companies
You're really valuable companies revenue profitable, but they're not sexy. Maybe they're not putting on sensational press releases
They kind of get ignored and that's and then you have so basically investor psychology
Has caused a lot of the shift 2008 also
basically eradicated a lot of the retail investors retail investors used to be the first type of you know,
The front line to find these companies so the projects were like this, you know back in the day
You'd have the retail investors come in and buy these stocks
Just in creating enough volume for these stocks to go up then
Institutional vegetable come in the body stocks and they take it to narrow level
So we'll just create this nice liquidity and it worked really well, but everything's broken out is less retail investors finding these stocks
institutional investors have
This regulatory kind of environment is making it less popular than to buy these stocks
So it's just it's the whole
The whole supply demand kind of environment. It's kind of change over time
so it takes a lot longer for these companies to kind of
You know be recognized that's kind of the environment and you have a lot more ice
I mean you have a lot of different fraud now you have pump-and-dump frauds more sophisticated
Not just in the OTC anymore. You had the China
Fraud that we were pretty big an outing between 2000 and I think 9 to 14. We're still doing it now
So the whole environments change and you know, you have short selling, you know sites like seeking alpha
so we're kind of all just
You know naturally on edge of all the time
And that just changed a lot of the environment. So I think there's a shorter term nature of this market
Has really made it tough for investors to want to be in these illiquid names that may don't react right away
Where it might take some time to amass opportunity though, if you're willing, although it takes longer time, maybe to realize balancing these companies
It's taught me as an investor because it's like wow, that's a longer longer term is incredible. You know, I've always been opportunistic investor
I wouldn't know I was able to find lots of great gains, you know
Six months to a year and these names years ago
now it takes longer but it's forcing you to actually do better research dig deeper and
All these things were multi bagger returns over time. So basically you're saying that the micro-cap market right now is kind of inefficient
There's a lot of liquidity and there's a discrepancy between these high-flying cannabis names and blockchain names versus these
Tier one names with value is that basically what you're saying?
Yeah
It is and Ashley's I feel like all the mark in general is more efficient as we've moved on I believe
It's more inefficient than ever in the meijer cap universe and what great place who thought that whatever happened
and what better position to be in to be hunting and if
So you have less people looking for the opportunities you have less people allowed look for opportunities
you know brokerage firm is making it harder, you know for retail investors the bodies companies, so it's just great if you're willing to
Look there and have a time horizon more than one minute the average holding period for a retail investor
my medicine generally has slowly gone from
Six years to six months and this is that was a passive. Maybe three years ago
It's probably less now. So that is really tells you the state of the space and
What's going on Maj? Well, thanks so much for shedding. Some light on micro caps. It was great having you on the show
Thanks so much. Thank you Jake and I look forward to being here again