Small-cap stock investing - RDFN
I mostly invest in pretty blue-chip options like index funds, large cap companies, etc. I took a little gambling money though and bought Redfin stock, the real estate startup - I’d used their service, it seemed like a good idea with a large addressable market, etc. My question is, does anyone invest in small cap stocks, and how? RDFN, my first real exposure to this, swings wildly by a few percent many days, and I can’t find any news indicating why. Usually there’d be some news if a large cap moved nearly as much. It also seems super uncorrelated with broader market trends. Are there data/news sources that have meaningful info on such stocks? Do their moves tend to be dominated by insider trading or a handful of large investors or similar?
I can't wait for some regulator to slam Redfin with a lawsuit that will drive them into the grounds for market manipulation.
Encourage sellers to list 15 percent below market, encourage buyers to go up 25 percent or more and waive all contingencies that may stop the commission from going through quickly. How is this legal?
Funny I always thought real estate was heavily regulated. This might as well be crypto at this point.
Real estate lacks transparency and is very not heavily regulated compared to equity and banking industry. Many aspects of the business is out of date and old-fashioned (like the fact that agents get 6% of sales price. Why?)
I wonder how much home prices would drop if their commission was a reasonable amount like 0.6 percent
6% is an OK figure when the average house price is 350k in USoA. Agent effectively only gets 1-1.5%, leftover is split between the broker and the company. 6% is egregious in markets likr bay area, NYC where median price is approaching 1 mill. But the "free market" is paying it anyway.
Look for yext and twilio beaten down but will rise
Yes. Find a thinly traded OTC stock with a market cap of preferably no more than 5m. Buy low, sell high. Repeat.
Redfin is not a startup, it has been around for 13 years but hasn’t managed to grow much so it is basically a small-cap A balanced portfolio can have some exposure to small caps and even within small caps it is good to diversify. Small caps are more risky than large caps but offer potential for multi fold returns. The idea behind investing in small caps is that one or two of them will grow significantly to make up for losses from others. In the hypothetical scenario, let’s say invest 1k each in 10 small caps, the hope here is that in 5 years time, 2 of them will go 10x, a 4 of them will just about hang in there and the other 4 will cease to exist. So basically your 10k will go to 24k in 5 years (again all hypothetical) A good way to start can be investing in small cap funds
Don’t small cap funds mostly defeat the purpose? If you take high risk investments and average them all out don’t you just get Eg the Russell which isn’t too volatile but generally lower returns than the sap?