If there is any such thing as a free lunch in finance, diversification would be the closest investment principle to it. A well-diversified portfolio provides investors with a good balance of reducing risk but still enough exposure to capture profits. When dealing with microcaps, it is critical that investors understand this concept. Given that most opportunities in this space can promise astronomical rewards, many undisciplined investors tend to forget or disregard the risks involved.
Equities.com discussed the art of diversification in microcap investing with Stephen Kann, to gain some insight on this topic. Read the full article on Equities.com.