I started off tiny in the 1990s with bank stock conversions by routinely purchasing a few hundred stocks in an IPO. My success with the bank conversions at last helped me to buy thousands of shares in more recent IPOs. The account outline below shows some of the mutual bank stocks I purchased in an IPO in the 1990s. The cost of the 2,589 shares was $25,890 (2,589 x $10 per share = $25,890). The market worth was $52,103 leading to a $26,213 profit and a 101% return.

Market Price of $52,103 Minus Cost of $25,890 = Profit of $26,213

Buying Conversion Stock in a Community Offering

Depositors at mutual banks have priority subscription rights in the event the bank decides to convert to stock possession. It's actually possible to buy IPO stock even though you don't have a deposit account at the changing bank. Occasionally depositors with priority rights don't purchase all of the available stock making it available to the public in what is called a Community Offering. Examples of Community Offerings would include the Port Monetary, Hudson City Bancorp and Connecticut Bancshares conversions.

So as to purchase stock in the Community Offering you must call the bank and obtain a stock order form and prospectus. The stock order form must be finished and returned to the bank before the Subscription Offering Cut off point. A check to cover the quantity of shares bought must be included with the stock order form. It typically takes one or two weeks after the Subscription Offering Cut-off point for the stock to be allotted and for stock certificates to be mailed to clients.

Examples of MHC 2nd Stage Offerings

Enclosed on the following several pages are stock price charts of Mutual Holding Companies that conducted Second Stage Offerings. This sample of price charts reflects the price movement of the minority stock before the finishing of a MHC Second Stage Offering. Spot the price appreciation realized by minority investors before the 2nd stage conversion.

MHC Technique Current Profit Results

I make trade suggestions for MHC stocks which can on occasion be purchased in a broker account thru my advisory service. The table below lists the current open trade profit results for the MHC Strategy. The portfolio has $59,323.30 in open trade profits with an average return of 34.8% before commissions.

Many MHC stocks are thought to be value stocks as they generally have a decent Price to Book values and important cash on their balance sheets in relation to stock price. For instance, I listed the cash per share as a percentage of the current stock price for a sampling of MHC stocks below.

Chuck Hughes News article on stock trading technique

Provident Savings Bank was set up in 1839. Provident is a rewarding bank and has accumulated over $300 million dollars in kept revenues since its founding. Provident is a mutual savings bank. Mutual savings banks are owned communally by their depositors. Provident’s earnings have been amassing for a number of years but cannot be accessed by the depositors. Prudent Bank made a decision to convert to stock possession and sell shares of stock in the bank to its depositors. The shareholders of the stock own all of the equity or net worth of the bank including the retained revenues that have been building up for many years.

Provident sold stock to its depositors at 65% of book value. Book value is worked out by subtracting the debt of the bank from the assets of the bank (including the retained earnings). Book price for many banks is mostly cash (retained revenues and the money received from the IPO). So that the depositors purchasing the Prudent stock in the IPO are largely purchasing the net worth of the bank for 65 cents on the greenback.

The IPO stock price was $10 per share. If the stock is coming out at 65% of book price then the book value is about 15.38 per share (15.38 x .65 = 10.00). If the stock trades up to book worth at 15.38 then there'll be a 53.8% return for depositors who acquired the stock at $10 (15.38 minus 10.00 cost = 5.38 gain divided by 10.00 cost = 53.8% return).

Provident Bank converted from a mutual bank to stock ownership and offered depositors of the bank to buy stocks in the conversion IPO at $10 per share. As a depositor at Prudent Bank, I received notice by mail of the upcoming conversion and a stock order form which allowed me to purchase stocks in the conversion at the expedient IPO cost of $10. I finished the stock order form and returned it to the bank together with a check to get the stock.

As a depositor at Prudent Bank, I was able to purchase 52,000 shares of Provident Bank at $10 per share. I received a stock certificate from the bank (see copy of stock certificate that follows). I deposited the 52,000 shares of Prudent Bank in my trading account.

On the IPO date shares of Prudent Bank started trading on the stock exchange. On the 1st day of trading, shares of Provident Bank closed at 15.85. Buying the shares at $10 produced a $5.85 profit per share on the IPO date (current price of $15.85 “price of $10 = profit of $5.85). I had 52,000 shares of Prudent Bank which produced a total open trade profit of $304,200 on the IPO date. Not bad for a day’s work!

Chuck Hughes Stock Advisory

Our discourse so far on bank conversions has targeted on banks that do a full conversion and sell 100% of the available shares to depositors. There is a second sort of conversion commonly known as a ‘partial conversion’. Some mutual banks form what is sometimes known as a ‘Mutual Holding Company’. Banks with a mutual holding company structure own the bulk of shares (greater than 50%) of stock in the subsidiary bank. When a Mutual Holding Company switches to stock ownership it sells a minority (less than 50%) of the available shares to its depositors in a partial conversion. Minority shares that are sold to depositors are publicly traded on the NYSE or Naz stock exchanges.

For instance, TFS Finance Corporation operates as the holding company for 3rd Fed Savings Bank. The TFS Finance holding company keeps 74% of the exceptional shares of Investors Savings Bank. Third Fed. Savings Bank conducted a partial conversion and sold 26% of the notable shares to depositors of 3rd Fed. Savings Bank. The shares are traded on the NAZ under the symbol TFSL. I had a savings account at Third Federal Savings Bank and was able to purchase stocks in the partial conversion.

The present trend in conversions means that the Mutual Holding Company structure is starting to become more and more popular and now accounts for the bulk of conversions.

The Net Worth of the Bank Can Double Overnight

Backers Bancorp is still a Mutual Holding Company (“MHC”). Many MHCs decide at later on to sell the shares held within the holding company in what is known as a ‘second stage offering’. In a second stage offering the bulk of the shares held in the MHC are sold to depositors in a ‘second step ‘ IPO.

When this happens the current minority shareholders nearly always receive an important price appreciation in the cost of the minority stock. This price appreciation happens as a consequence of the increase in the net worth of the bank that may double or even treble on the day a second stage offering is completed. The net worth increases as the cash received from the sale of the majority shares is added to the bank’s treasury.

MHC 2nd stage offerings are not the same kind of offerings that result when a public company sanctions a rise in the amount of its exceptional shares and then completes a secondary offering during which extra shares of stock are sold. This ends in a dilution of shareholder’s equity. The MHC 2nd stage offerings are accretive to stockholder equity as money is received for the sale of the majority shares in the second step IPO but the total number of major shares is not increased.

In a MHC second stage offering minority stockholders typically receive two to four shares of the new stock issue for each minority share owned in order to maintain their original share of ownership. ‘Second stage ‘ offerings increase the capital base of the bank which permits the bank to extend its loan portfolio which in turn can increase the earnings potential of the bank

90% Return with Low-risk

For instance, in my child Ryan’s education account, I acquired 500 shares of Bank Mutual Enterprise the Mutual Holding Company for Mutual Savings Bank at $23.50 per share for a total investment of $11,750 (see brokerage confirmation that follows).

Bank Mutual MHC afterwards conducted a second stage offering and sold the majority shares held by the holding company to depositors at the bank. As minority investors, we got 3.668 shares of the new Bank Mutual stock for each minority share we owned so now we own 1,834 shares of Bank Mutual. The prevailing price of Bank Mutual is 12.20. Our 1,834 shares are now worth $22,374 which translates to a $10,624 profit and a 90% return.

The 90% return demonstrates the strong profit potential of making an investment in the minority stock of Mutual Holding Company and the proceeds from selling this stock may even cover one year of varsity costs for Ryan!

Chuck Hughes Stock trading Cash Flow Trader

Shall we now have a look at the ‘big picture ‘ for investment returns for assorted asset classes versus inflation over the past 70 years. This can give us a broad point of view on the best way to best deploy our investment funds. I believe it is provident that each investor without reference to age or level of investment experience should diversify their investments between real estate, stocks and fixed earnings investments. The table below compares the long-term return performance for Treasury Bills, Gold, Treasury Bonds, corporate bonds, home prices and common stocks.

Kind of Asset Class:

Treasury Bills: 30-Day Maturity

Treasury Notes: 5-Year Maturity

Home Prices: Home Price Appreciation (national average) *

Common Stocks: S&P 500 Stock Index Total Return with

dividends reinvested

Corporate Bonds: 20-Year Corporate bonds

Gold Price: London PM Fix

* Information Source: US Census Bureau and National Association of Realtors

This table reveals that the average annual rate of inflation over the 70-Year period was 4.0%. Treasury Bills produced a 4.1% yearly compounded return over the same period. After accounting for inflation, T-Bills only produced an annual ‘real ‘ return

of 0.1%. Regardless of the powerful return performance for gold over the last a few years, over the long term gold only produced a 1.1% yearly real return after accounting for inflation. Though gold is usually considered protection against inflation, the 1.1% yearly real return doesn't provide much of a return beyond the inflation rate. 5-Year Treasury Notes produced a 1.5% annual real return, corporate bonds a 1.7% real return and home costs appreciated at an annual rate of 2.1% after accounting for inflation.

Only stocks provide a meaningful return after accounting for inflation. The S&P 500 Index with dividends reinvested produced an inflation adjusted compounded annual return of 6.8%. A $1,000 investment in the S&P 500 Index grew to $1,287,957 making a 128,696% total return. Based on this long-term historic return information, only stocks supply a real rate of return after accounting for inflation. Home prices and gold are historically viewed as inflation hedges. Nevertheless the inflation altered annual return for stocks of 6.8% was actually more than 3 times bigger than the inflation changed return of 2.1% for home prices.

This raises the question. Why are stocks the real performance winner compared to other asset sectors and why do stocks provide the only serious real return after accounting for inflation? In the next Chapter we are going to discover why stocks provide the best real return matched against all the other investments.

Chuck hughes Invest in stocks

Making lots of money may be as near to you as your local bank. Yes, your local bank could have unemployed wealth just sitting there waiting for you to harvest. I would like to share with you one of my most successful methods of earning profits. This little known investment plan is extremely simple, yet so effective. It is as simple as going to a bank and opening up a savings or checking account. It's the epitome of simplicity, yet its potential is never-ending! Does this sound too good to be true? This is true and I would like to tell you this is the real deal!

This straightforward yet effective method of making profits is investing in bank stocks. Not just any bank stock, but banks that are converting from non-public possession to public ownership. There's real wealth available here! Real profits that are just sitting there waiting for me and you! What more could a stockholder want? This investment opportunity is simple, low risk and has the capability to be really worthwhile. I've been investing in these bank stock conversions since 1993 and I have never been unprofitable with this investment opportunity.

The better part is you can begin with as little as fifty greenbacks! Yes, only 1 50 dollar bill will set this ship sailing! This is what I consider an investment opportunity of a life time!

I need to tell you there is not any more delightful way to earn income. My wife and youngsters and I really turn this business move into a series of little mini holidays. We have seen a lot of the country and had a great time doing it!

We have made numerous journeys to open bank accounts at personal banks and at the same time have enjoyed the fall in New England, lobsters on the Cape, shopping on Chicago’s Magnificent Mile and great sailing on the Chesapeake. For folks who like to travel it's a great business but for those of you who want to stay home and earn there also are lots of opportunities! There are banks all across the land that will open an account for you through mail. Either way, you can come out a winner!

Let me give you a quick explanation of this business and I am going to go into more detail all though this Chapter. When a bank converts from non-public ownership to public ownership, the bank sells stock. The bank offers folks who have accounts with their bank first concern on buying stock before the bank goes public. The stock is offered to the account owners at a very agreeable price. Once the bank goes public, the stock regularly powers in price, giving the account owners who were sensible enough to buy the stock a very valuable asset.

I made as much as a $304,200 profit in twenty four hours purchasing private bank stock on the conversion date. I'm hoping I have gotten your attention. Let me explain to you

more.

“The Investment Opportunity of a Lifetime”

Peter Lynch (Worth Magazine)

I have been investing in private , jointly owned savings banks that convert from private ownership to stock ownership since 1993. There are currently over 700 mutual savings banks in the U.S. That are mutually owned by the depositors very similar to a farmer’s co-op that is owned by farmers.

Many mutual savings banks have been operating profitably for 100 years or more. These banks are not in public owned and have no stockholders. Any profits they make are accumulated over time and are mutually owned by the depositors. The depositors can't access this accumulated profit also known as ‘net worth ‘ or ‘equity ‘ unless the bank converts to stock ownership in what is commonly known as a Stock Conversion or Initial Public Offering (IPO).

In the stock conversion the bank ‘goes public ‘ and stock is sold to the depositors of the bank in a Subscription Offering. Thereafter shares of the bank are traded on one of the major stock exchanges. The vast majority of banks that convert to stock ownership trade as microcap stocks.

Lots of mutual savings bank stocks trade on the NDX stock market and the New York Stock Exchange (NYSE). For reasons I am going to explain later on depositors of the changing bank get to buy the stock at a much lower price than the price the stock will ultimately trade on the open market. Feted investor Peter Lynch was the former chief of the Fidelity Magellan fund. In a chat with Worth Mag Peter Lynch called mutual savings bank stock conversions “The Investment Opportunity of a Lifetime”. Just think, one hundred years of banking profits just waiting for you! Your profits have been sitting their safe in the bank.

Investment Technique Chuck Hughes

Tiny company stocks are typically overlooked as a doable investment asset group. But with this absence of attention comes opportunity. You are about to find out that small company and in particular micro cap stocks are the best performing asset class compared to virtually any other sort of investment.

Simply owning small and micro cap stocks significantly out performs each other sort of stock investing method. I have been investing in tiny and micro cap stocks over the last 17 years and I am a firm follower that micro cap stocks should be a part of every investor’s portfolio.

OBA Monetary Has a Market Cap of $61.4 Million

I now own shares of OBA Monetary stock. The market value or capitalization (cap) of a stock is figured out by multiplying the cost of the stock by the number of shares outstanding. For instance, OBA Financial stock is at present trading at $14.36 per share and has 4.28 million shares major. To work out the market cap we multiply the price per share times the number of shares outstanding. OBA Money has a market capital of 61.4 million bucks.

4,280,000 Shares x $14.36 Per Share = Market Cap of $61,460,800

My research using market principal as an investment plan reveals that th e size of a company is the most trusty indicator of future investment returns. On average , tiny firms have higher investment returns than established firms. My historical analysis shows the smallest corporations provide the highest investment returns.

The smaller a company is. The more likely it'll produce a higher investment return. Historic return info shows that average investment returns increase as one moves down the size range from the biggest companies to the smallest companies.

Size Spectrum

Frequently used terms to explain capitalization size from biggest to smallest:

Mega Cap (biggest)

Massive Cap

Mid Cap

Small Cap

Micro Cap* (littlest)

*Micro Cap is stocks in the 10th Decile (smallest 10%) in terms of market funding of stocks traded on NYSE/AMEX/NDX.

70 Years of Historic Investment Returns

Size versus Return

Micro Cap stocks produce bigger returns than Small Cap stocks

Small Cap stocks produce bigger returns than Mid Cap stocks

Mid Cap stocks produce larger returns than Giant Cap stocks

Massive Cap stocks produce bigger returns than Mega Cap stocks.

Chuck Hughes Understanding stock trading

Return 14 Times Larger

The expansion of stockholder’s equity represents true expansion of capital for shareholders. CNQ’s strong equity growth enabled CNQ stock to out perform all the other investments that don't have equity expansion. CNQ stock produced returns that were 14 times larger than the returns for gold, 5-Year Treasury bonds, home costs and T-Bills demonstrating the better returns supplied by firms with high equity growth rates.

The examples that follow depict corporations with high equity expansion rates that were tiny and micro cap companies at the beginning of the test period. These companies represent a broad cross section of industries including broking services, ceramics manufacturing, tool making, electrical products producing and energy systems.

The average return of these stocks over the testing time was 1,370% demonstrating the ability of high value growers to form wealth for shareholders. There is nothing micro about the high equity expansion rates and the potential for profits in the examples I am about to show you! Be ready to be impressed!

Downloading Equity Expansion Rates

A corporation's stockholder’s equity information can simply be downloaded from websites like Google Finance or ycharts.com. Let’s go thru the steps to download equity expansion rates from Google Finance. Sign in to http://www.google.com/finance and type in the symbol of the company that you would like to inspect. This will display quote info for the chosen stock. I typed in ‘CLH ‘ the symbol for Clean Harbors Inc a tiny cap stock and received the quote info displayed below. On the left side of the quote display there's a column of additional information available for the chosen stock. Under Summary select ‘Financials ‘ .and this can display a company's stockholder equity information at the base of the balance sheet page. I included the balance sheet information for Apple Inc symbol AAPL on the following page.

Figuring out Annual Stockholder’s Equity Growth

For the period ending 25-Sep-04 Apple’s stockholder’s equity or natural price was 5,076,000 which is circled above (all numbers in thousands). 2 years after on 30-Sep-06 Apple’s stockholder’s equity was 9,984,000. If we subtract the 5,076,000 starting figure from the 9,984,000 ending figure the net result's a 4,908,000 gain in stockholder’s equity for the two year period. If we divide the gain of 4,908,000 by the beginning stockholder’s equity figure 5,076,000 the result's a 96.6% percentage gain in stockholder’s equity. If we then divide the 96.6% total gain by 2 (years) the result's a once a year percentage gain in stockholder’s equity of 48%. Retained revenues is the largest part of Apple’s stock holder’s equity. Most of the increase in Apple’s stockholder’s equity was the result of the expansion in kept takings which grew at a 55% yearly rate over the same 2 year period.

Retained takings growth reflects a company's ability to grow its takings and to retain those revenues. Stockholder’s equity takes into account a corporation's ability to retain its takings and a corporation's debt level as debt decreases stockholder’s equity. So a firm's stockholder’s equity growth is the best overall measurement of the capability of a company to grow its earnings and to keep its takings. A company with a raised level of stockholder’s equity expansion provides economic value to its stockholders as the true worth or intrinsic value of a company grows.

Steps for Calculating Apple’s Yearly Stockholder’s Equity Growth:

1. Sign in to Yahoo Finance and click ‘Balance Sheet ‘ to obtain a company's stock holder’s equity information. Apple’s current net worth is 9,984,000 and two year’s gone its net worth was 5,076,000.

2. Subtract the net worth from 2 years back (5,076,000) from the current net worth (9,984,000) to get the two year increase in net worth which would be 4,908,000 in this example.

3. Divide the 2 year increase in net worth (4,908,000) by the beginning net worth from two years back (5,076,000) and multiply by. 100 to get the two year total percentage increase in net worth which would be 96.6% in this example.

4. Divide the 2 year pc rise in net worth by 2 to get the once a year percentage raise in net worth which would be 48% in this example.

5. If the annual percentage increase in net worth is 10% or greater then the stock qualifies as a Wealth Building Stock.

Chuck hughes Stock Investments

Let's now take a look at the reason stocks have provided the best investment returns over time. When you purchase a stock you become a partial owner of the company and own a percentage of the company. The value of your proportion of ownership is known as ‘stockholder’s equity’. Stockholder’s equity is actually the net worth of a company and is worked out by taking away the debt of a company from its assets.

Stockholder’s Equity = Assets Minus Debt

If a company is liquidated then stockholder’s equity or net worth would compare to the break or liquidated cost of a company after all debt is paid. When a company produces earnings and can retain those revenues it increases its net worth. Retained revenues are routinely the biggest component of net worth. When a company is able to grow its stockholder’s equity or net worth it creates business worth for its stockholders and makes a firm's stock more valuable.

As the net worth of a company grows the company can increase its production or services. Banks can increase their loans. Insurance companies can write more policies. This increase in production or services can in turn create more revenue for the company. A company that is growing its net worth is creating real wealth. Owning equity or stock in such a company is regarded as a ‘real ‘ investment.

This is different than buying real-estate or precious metals or collectibles with the hope that someone will pay you more than what you paid for it. This is price speculation as there is no growth of net worth or equity with these sorts of investments.

Corporations that produce and retain revenues enable stocks to supply the best returns compared to all other types of investments.

The increase in stock holder’s equity or net worth of a company has always authorized stock financiers to enjoy the highest investment returns. As long as corporations continue to supply and retain takings, stock investing will always provide superior returns compared to all other types of investing.

My actual trading experience and historical research demonstrates that there's a robust link between the expansion of a firm's net worth and the price appreciation of its stock. Traditionally the open market price of a stock normally follows the expansion of a company's net worth. If a firm's net worth increases then normally the market price of its stock also increases. If a firm's net worth decreases then usually the current price of its stock also decreases.

Ultimate Goal of Stock Investing

As a corporation's net worth grows the true price of your stock investment grows. Eventually this is the reason we invest in stocks and what separates stock investing from all other types of investments. Growth in company net worth has made trillions of greenbacks of business value to shareholders and is the bedrock of a capitalist economy. Stockholder’s equity supplies the capital that creates firms and lets them grow.

The going rate of a rewarding stock barely ever trades below its stockholder’s equity even during bear markets. This stands to reason as natural price creates a ‘floor ‘ under the market price of a stock. If the stock of a profitable company trades below its intrinsic appraise it could be liquidated at a bigger price than it stock price or it may be purchased by another company at little or no cost by creating debt secured by the assets of the purchased company.

Let's take a look at examples of corporations with a high stockholder’s equity rate of growth so we will compare the growth of stockholder’s equity to other investments. Our first example is Canadian Resources (CNQ) which is an energy exploration and production company. Over the past 15 years Canadian Resources had an expansion in stockholder’s equity of 2,573%.

The return graph that follows shows that a $1,000 investment in CNQ stockholder’s equity over the past 15 years grew to $26,731. Over the same period a $1,000 investment in gold grew to $2,832 producing a 183% return, 5-Year Central authority bonds produced a 154% return, home prices appreciated 91% and Treasury Bills produced a 69% return.

The 2,573% expansion in stockholder’s equity for Canadian Resources demonstrates the capability of the company to grow its takings and to retain these revenues. Kept takings account for 75% of CNQ’s stockholder’s equity.

The expansion in CNQ stockholder’s equity made true wealth for investors. Over the same period Canadian Natural Resources stock price appreciated 2,576% which barely exceeded the 2,573% expansion in stockholder’s equity.

Chuck Hughes Stock Investment

In the United States there are 2 kinds of banks. There are commercial banks that alter in size from the giant money-center banks like Bank of America and Wells Fargo to the regional banks like Wachovia and Sun Trust. The second sort of bank are the private mutual savings banks.

Most commercial banks are owned by stockholders with their stock being in public traded on one of the stock exchanges. Mutual savings banks, on the other hand, have traditionally been owned by their depositors in a co-operative arrangement like farm or dairy co-ops. While a commercial bank distributes its profits to its owners in the form of dividends, mutual savings banks do not disburse their profits to anyone!

There is Not any provision in the charter of a mutual savings bank for any distribution of profits at all! That money simply appears on the books of the bank as ‘net worth ‘ or ‘equity ‘ and amasses year after year after year. After 25 years, 50 years, 100 years, the net worth of a mutual savings bank can be $10 million, $50 million, $100 million, $300 million or more!

‘On paper ‘ the money belongs to the account owners or depositors, but there simply is no legal mechanism for the account holders to ever extract any of it. As a depositor (member) of a mutual savings bank, the sole return you may ever see is the interest paid on your savings or checking account or CD. As a practical matter, the accumulated earnings or net worth, truly does not belong to anybody! Reports filed with the Office of Thrift Supervision (OTS) show the mutual savings banks in the US have a combined net worth higher than $20,000,000,000 (twenty bn. dollars) that doesn't belong to anyone!

Mentioned below are examples of the more than 700 mutual savings banks in the U.S. And the amount of net worth or equity they have amassed over the years (rounded off to the nearest one million greenbacks) :

“The Nearest Thing to Printing Money”

Peter Lynch (Worth Magazine)

Over the last twenty years, more than 400 mutual savings banks have completed Stock Conversions in which their net worth was distributed to investors in the form of stock which was purchased in the conversion. Depositors who've accounts (checking, savings, money market, Certificate of Deposit) at the converting bank have priority rights during a conversion and get to get the stock at the Initial Public Offering (IPO) price (typically $10 per share) before non-account holders.

A high proportion of these 400 mutual bank conversions led to substantial profits for investors who purchased stock at the IPO price. Peter Lynch personally took part in mutual savings bank conversions and said “Investing in the local savings bank when it went public was the nearest thing to printing cash that ever came a stock picker’s way” in a talk with Worth Mag.

Example of a Mutual Bank Stock Conversion

To illustrate this idea, let's take a look at the stock conversion of Cambridgeport Bank in Cambridge Massachusetts. Cambridgeport Bank was set up in 1853. Since then the accumulated earnings or net worth of the bank has grown to $78,578,000. This net worth was essentially distributed to investors in the shape of stock when the bank converted from personal possession to public possession during the IPO. Shares of stock were sold to the depositors of the bank at the IPO cost of $10 per share.

The market replied approvingly to the Cambridgeport Bank stock conversion. The price graph below shows the daily price movement for Cambridgeport Bank stock. Depositors of the bank who acquired the stock at the IPO cost of $10 realized an 80% profit during the 6 month period following the IPO. After several years Cambridgeport Bank stock produced more than a 400% return to shareholders. As well as the price appreciation of its stock, Cambridgeport Bank also pays an 8% yearly dividend on stock acquired during the IPO.

Chuck Hughes Investment plan

Now that we know why stocks provide superior returns compared with other investments, let us take a look at a strategy of finding stocks with the best potential profit. My research of stock performance data shows the size of a company is the most reliable forecaster of future investment returns . Typically small firms have higher investment returns than large firms. The connection between company size and future investment returns covers the entire size spectrum and is not limited to the littlest stocks.

Historic return information shows that average investment returns increase as one moves from the largest companies to the tiniest. This correlation means that past annual returns are valuable in predicting future annual returns. Small and micro cap stocks have constantly provided higher investment returns than midand large cap stocks during the last 70-Years and based mostly on historical correlations should continue doing so in the future.

The table that follows shows investment returns relative to the dimensions of a company over the past 70-Years. This table clearly demonstrates the inverse relationship between the dimensions of a company and investment return. The biggest firms produced the lowest returns and the tiniest companies produced the highest returns. A $1,000 investment in mega cap stocks grew to $1.5 million; large caps $3.5 million, mid caps 4.7 million, little caps $5.8 million and micro caps $11.4 million.

The Best Profit Opportunity of Your Lifetime!

My experience investing in micro cap stocks over the past 17 years and my information research has led straight to the discovery of the vast profit opportunity available from investing in micro cap stocks. My research explains micro cap stocks provide the best investment returns compared with all other types of investments.

The table below compares the expansion of a $1,000 investment for varied investments during the last 70 years. This table dramatically exposes micro cap stocks out perform all the other investments by a wide margin. A $1,000 investment in micro cap stocks grew to a fantastic 11.4 million greenbacks.

Over the same period the growth of a $1,000 investment in Treasury Bills, gold, Treasury Notes, corporate bonds and home costs ranged from $16,817 to $63,131 and was insignificant compared against the returns for stocks. A $1,000 investment in the S&P 500 Index grew to $1,287,957 demonstrating that stocks and particularly micro cap stocks supply the best profit opportunities to be had today.

The graph that follows shows the growth of a $1,000 investment over the past 70 years for micro cap stocks, S&P 500 Index, home costs, corporate bonds, Treasury Notes, gold and Treasury Bills.

Chuck Hughes Investing and Returns