Archive for April 2011
SmallCap stocks have yet to utilize Social Media Tools; it may be too early in the cycle for a distracted CEO to understand how these platforms work, and many view growing Social Media sites like FaceBook and Twitter as a trend. LargeCap Companies are hiring full departments to man these platforms; in fact, it has been one of the few bright spots in a weak employment cycle. I guess the logical question is why? Why would a CEO pass on an inexpensive new marketing tool?
Clearly someone is wrong here and I believe the LargeCap CEO, in most cases, have better resources and make better decisions identifying tools that help his/her company sell products or services. Throughout history other important marketing tools were bypassed by smaller companies who were forced to catch up, and once a few “old line” CEO’s get fired because they refuse to adapt and are viewed as – missing the Social Media boat – you will see the this New Media Marketing tool part of day to day operations. Managers in general pay attention to the reasons their predecessors were fired. Most don’t realize the vast difference between a Fortune 500 company and how they operate versus a SamllCap company.
SmallCap Stocks are classified by their market capitalization of 1 Billion or less and most market watchers categorize stocks in 5 categories 1) MegaCap, 2) LargeCap, 3) MidCap, 4) SmallCap and 5) MicroCap. There are roughly 15,000 publicly traded companies in the US Markets and 70% of these are in category 4 or 5. This means that only 30% of companies have Market Caps above 1 Billion dollars.
If I were to advise an investor about what to look for in a smaller stock investment, it would be to examine the companies Social Media strategy in 2011 and how it’s working ……this will tell you much more about the management of the company than you know.
Northern WI 4/22/2011 (VestaDigital) – When I started trading commodities in 1979 from the Chicago trading floors we had data key punch girls who would walk around the different hexagon pits and collect 4 x 6 inch cards. They would then run upstairs to the data entry office and spend hours deciphering the traders scribbling on the cards. In the morning there would be a pre-opening session called ‘out-trades” where clerks would attempt to settle trades which did not match because of key punch errors or the inability to read the chicken scratch writing.
Flash forward to 2011 and you have zero latency Profit and Loss to your smart phone immediately upon making your trade deducting or adding money to your account and calculating the margin. The progress has been rapid, but most of the large steps have been taken in the last 5 years as internet speeds have solved the last mile and costs have dropped. There have also been many software developments to achieve zero latency and useful tools to track trading positions and move money around. The input errors we saw from the 70′s are virtually eliminated at entry and the “out-trade” errors are a thing of the past making execution seamless.
The next steps for Financial Services will revolve around Social Media and its effect on investors, traders and CEO’s and how they communicate. This is already taking place as platforms develop and dominating networks like Twitter introduce $Dollar signs and #Hash keys which become universal symbols across the networks.
Nearly every company will have a FaceBook page or a Twitter account before long. I will monitor the useful software as I write for Vesta Digital and hope you will follow along as we watch the way we invest and communicate change over the next few years…the days of and key punch cards are gone!!!!