Its Over

Originally posted by 1ronnie: ↑

As illustration, getting a 10% return on a very profitable stock like WDS in recent times can be a tough ask, over the past 1 year it delivered 10% (excluding dividends) and perhaps if one is smart enough to catch the lows of the month and sell at the peak in the cycle, you could get 10%.

In micro caps trading at 10c and above, 10% is just two bids. It can be achieved within a few trading sessions and sometimes even within the day.

You invest $33k to make $3.5k on WDS in a year, you might need just a third of the capital to make the same $ returns with well chosen micro caps that can deliver 30% within a short span of time. Of course, it sounds easy but it is not, but if well executed it could work.

Less $ in equity exposure with greater upside potential (but also comes with greater downside risk if does not work out). Must be money one can afford to lose though.

YTD view
WDS Stock Price and Chart — ASX:WDS — TradingView

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"Getting a 10% return on a very profitable stock like WDS in recent times can be a tough ask."

But that is the opportunity to buy the stock on what is an undervalued p/e of 5.29 and dividend yield of 11.16%. Some people think the oil sector is going down the drain. But the facts are oil demand has never been higher. So there is the underlying opportunity to those who are willing to be patient.

"In micro caps trading at 10c and above, 10% is just two bids. It can be achieved within a few trading sessions and sometimes even within the day."

It can also go the other way. The pips can leave you 10 - 50% down on investment very quickly, even before any announcements, and of course there are the capital raisings. It's more luck than anything, but trade the stocks no worries, if you know what you are doing.

"You invest $33k to make $3.5k on WDS in a year, you might need just a third of the capital to make the same $ returns with well chosen micro caps that can deliver 30% within a short span of time. Of course, it sounds easy but it is not, but if well executed it could work."

With micro caps, it is extremely difficult to pick all winners. So the overall return vs the overall risk is something to be considered, not just on a single stock but collectively. Traders can do really well from micro caps, but unless you apply good trading principles, most investors will probably get burned. Then there is also the time aspect, is it worth looking at the charts, forums everyday? Is it not just easier to invest in highly profitable companies at reasonable share prices, and to concentrate on the fundamentals of the business? I think so.