| The meteoric - and completely unexpected - rise of GameStop (NYSE: GME) this year continues to dominate market headlines as we continue into February. And why not? The GameStop saga is a compelling David-and-Goliath tale, with small-time retail traders pitted against massive hedge funds with billions of dollars under management. For a while, the little guys were winning: One hedge fund lost 53% on its portfolio in January as a result of the short squeeze that small investors triggered in GameStop options. (For a great explanation of what a short squeeze is and how it works, check this out.) But if you've been reading about the situation and are now thinking of jumping on the GameStop bandwagon, know it's probably a bad idea. Chief Investment Strategist Alexander Green explains why right here. In addition, the stock was down 76% this week (as of Friday morning) after jumping 400% the week before. You can ride that roller coaster from a safe distance by looking at the stock chart... Few investors have the stomach for such a wild ride. I know I don't. GameStop was valued at about $1.1 billion just two months ago. At Monday's market open, its market cap had risen to almost $22 billion, which briefly made it larger than 200 of the companies in the S&P 500 Index. (The market cap is the value the market assigns the company, and it's computed by multiplying the stock price by the number of shares outstanding.) It's Time to Think Small Small caps are stocks with a market capitalization between $300 million and $2 billion. Microcap stocks are even smaller... They're valued between $50 million and $300 million. Small caps and microcaps are much, much smaller than household names like Amazon (Nasdaq: AMZN), which has a $1.66 trillion market cap; Walmart (NYSE: WMT), which has a $396 billion market cap; and The Walt Disney Company (NYSE: DIS), which has a $308 billion market cap. Because of their small size, small caps and microcaps tend to have much greater growth potential than the megacap stocks. It's much easier to double sales and profits when they're in the millions of dollars than when they're in the billions of dollars. Microcaps, in particular, "have the potential to generate some of the market's biggest returns," Alex wrote in a recent article. "They are tiny, so mutual funds and hedge funds can't buy them. Wall Street doesn't follow them. And the mainstream media doesn't report on them." And microcaps are surging right now. The chart below shows their performance since last March compared with the performance of the S&P 500, which tracks the largest U.S. stocks. Take a look... Small cap stocks tend to outperform large caps in the immediate wake of a recession (which is now). That's because smaller companies use different sources of financing. And during early recoveries, small-company financing (floating rate debt) is cheaper than the long-term fixed debt used by bigger firms. But you don't need to invest in GameStop to realize the potential of small cap and microcap stocks. You just need some guidance to find the small stocks to invest in. Definitely check out Alex's video about identifying the microcap stocks with the most potential right now. And if you want an expert take on the GameStop story and what it means for the little guy going forward, you'll want to watch this video by Monument Traders Alliance Head Trade Tactician Bryan Bottarelli. He contends the GameStop story has started a "trading revolution" and that it's "going to set in motion a new era of how you can make money on Wall Street." He might just be right. (And be sure to sign up for Bryan's free e-letter here.) Enjoy your weeekend, Matt | 
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