The first point is that this is a basis using fundamental analysis.
Point 1 is to invest in very small capitalised companies under $20 million.The reason is that if you get it right the share price can multiply quickly.
Do a scan of the whole market with the following criteria market capital under $20 million also put in companies that make a profit with a price to earning ratio under 20.You might get a list of say 50 companies of these get rid of mining.You might then come to 20 companies.Add to this list other companies that you hear about that could become cashflow positive in the medium term(1 year say at most).you then have say 30 companies.
With these 30 then narrow down.
Take off companies that have no liquidity that you can not get a descent holding
Take off companies where directors don't have more than 5% holding
Take off companies with high debt.
You might then come down to say 5 companies and go right into those companies.Because you then know these companies like the back of your hand you will be able to review and take a higher conviction. The best opportunities will be those that everyone hates and you will almost have unlimited shares to buy.This type of opportunity may only come around a couple of times a year so act.Once the company starts to perform the haters can become buyers.Just some thoughts.
