Successful micro cap investors have to develop the capacity to tolerate a loss. You must be secure in the knowledge that a few really large winners will result in success. Most unsuccessful investors become pre-occupied with their mistakes, blaming brokers, analysts, company management, or the IO Report . Successful investors expect mistakes. Most successful investors enjoy the process of investing as much as they enjoy making money.
Stocks can go up infinitely, but they can only go down to zero.
Therefore, whenever you invest for the long term in a microcap stock your upside potential is much greater that your downside risk. Learn to Tolerate Bear Markets. Microcap Stocks, as with all stocks, will always trade both higher and lower than you ever thought possible. We go through extended periods of time when market conditions are unfavorable for microcap stocks which can be psychologically damaging to undisciplined investors. Because microcaps generally trade less volume than their bigger brethren, market makers can manipulate price levels in their favor in both up and down markets.