Skin in the Game
Another reason I like small caps: In many cases, a big portion of the management team’s personal assets are invested in the company’s stock, even though their financial planners probably say they need to be more diversified. If the stock rises, they’ll be in “high cotton,” but if things go south, the company managers and their families could be suddenly “downwardly mobile.” I feel good when management is in the same boat as I am. Will they work hard to grow the company and get the stock price up? Is the Popemobile Catholic?