Karim Rahemtulla, Co-Founder, Monument Traders Alliance Dear Reader, Here's an adage that's saved me from countless disasters over 30+ years: Microcaps are microcaps for a reason. But let me tell you about the time I broke my own rule—and made a fortune doing it. Back in 2022, I recommended Rolls-Royce (RYCEY) when it was trading like a microcap disaster. Beaten down, left for dead, priced under $2. Today? We're sitting on an 18x return and still holding. Here's the difference: Rolls was never actually a microcap. It was a world-class company temporarily priced like garbage. Most microcaps? They're just garbage. The Uncomfortable Truth Behind Microcap Nightmares The data doesn't lie, and it's uglier than you think. Only 37.4% of small-cap stocks ever beat risk-free Treasury rates over their lifetime. Let that sink in. Nearly two-thirds of these "opportunities" do absolutely nothing. The median lifetime return across all stocks? Negative 3.7%. For microcaps, it gets worse. I've been saying "maybe one out of ten" based on three decades of watching traders get slaughtered. Turns out the data backs me up—and it's actually more awful than my gut told me. The Red Flags That Should Make You Run After watching hundreds of microcap meltdowns, here's what screams trouble: The Hype Machine Red Flags You'll see a ton of press releases, almost daily. These companies love to announce partnerships, developments, and breakthroughs that sound impressive but rarely move the needle. They'll do coat-tail riding announcements that mention bigger companies in their industry, trying to create some association that doesn't really exist. And check out their boards - stuffed with former government officials and high-ranking military members like that somehow validates their business model. Meanwhile, they've got more executives than actual employees doing the work. The Volume Manipulation Signals Watch for huge volume spikes followed by days of crickets. Nothing. Suddenly, another spike occurs when they need to dump more shares. Most of these trade under 100,000 shares daily, which means you're trapped when you need to get out. And a lot of them are non-US companies trading OTC because they can't meet real exchange standards. The Financial House of Cards Zero sales, no profits, but somehow they're the next big thing. Low cash balances until they do a capital raise right after the stock pops - convenient timing, right? They'll announce foreign deals that sound massive but turn out to be letters of intent or memorandums of understanding that never materialize into actual revenue. | 
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