When people talk about the stock market, they usually talk about the same names.
Big companies. Famous brands. Stocks that dominate headlines and fill the media all day long. That is where most attention goes. That is also where most money goes.
That is why the greatest opportunities often live somewhere else.
Microcap stocks sit in a quiet corner of the market. These are companies with small market caps, limited analyst coverage, and very little institutional ownership. Many investors ignore them entirely.
That neglect is not a weakness. It is the source of the opportunity.
Warren Buffett understood this better than anyone.
Long before Berkshire Hathaway became a household name and a trillion-dollar company, Buffett was running small amounts of capital. He could buy tiny companies that were invisible to the big money. He has been very clear about how powerful that advantage was.
Young Warren Buffett before the billions. This is where his real advantage began
As he once said, “If I was running $1 million today, or $10 million for that matter, I'd be fully invested. Anyone who says that size does not hurt investment performance is selling ... I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”
That statement matters because it reveals a truth most investors miss. Size is not an advantage in investing. Size is a constraint.
When you manage hundreds of billions of dollars, your choices shrink. You cannot buy small companies without moving the stock price against yourself. You cannot own illiquid businesses.
You are forced into the same narrow pool of large stocks that every other institution owns. The result is efficiency. Stocks are fairly priced. Opportunities become scarce.
That is why trying to copy Buffett today is so limiting.
Many investors look at Berkshire Hathaway’s current holdings and try to mirror them. That misses the point. Buffett owns what he owns today because of the size of Berkshire. He cannot buy microcaps even if he wants to.
The Better Lesson Is To Copy Buffett Before He Became Buffett
When Warren Buffett was managing only a few million dollars, he worked in parts of the market most investors never visit. He was not searching for popularity. He was searching for neglect. That is where opportunity lived.
This was the period when he invested in companies like Greif Bros. Cooperage, Sanborn Map Company, and Marshall Wells.
These were quiet businesses. No analyst coverage. No institutional interest. No excitement. That was exactly why they worked.
Greif Bros. Cooperage made barrels and industrial containers in a narrow niche that bored Wall Street. What mattered was steady demand, real assets, and cash generation that the market ignored.
Sanborn Map Company was a sleepy map publisher whose true value sat in an investment portfolio worth far more than the stock price, creating one of Buffett’s clearest asset mispricing wins.
Marshall Wells was a hardware wholesaler where value lived in inventory, real estate, and disciplined operations rather than headlines.
Buffett could buy these companies because no large investor could. They were too small. They were too illiquid. They simply did not matter to big pools of capital. That lack of competition gave him room to work.
He read obscure reports that few people requested. He studied balance sheets that no one bothered to open. He focused on what a business owned, how cash flowed through it, and whether management respected capital.
While others chased excitement, he quietly accumulated positions where price and value had drifted far apart. That is where his greatest percentage returns came from.
Later, success changed the game. Managing hundreds of billions of dollars removed entire sections of the market from his reach. The freedom he once had disappeared as Berkshire grew.
Many investors make the mistake of copying what Buffett buys today rather than how he built his record in the first place.
The real lesson sits earlier, when he was small, flexible, and willing to work where others would not.
Those conditions still exist. Microcaps still offer the same setup.
Large institutions cannot invest meaningfully in these companies because they need liquidity and scale. Analysts pass because there is no incentive to cover businesses that will never move the needle for big clients.
That lack of attention leads to mispricing. Prices drift away from business reality. Good companies can stay undervalued for long periods simply because no one is watching. When growth appears or earnings surprise, the adjustment can be dramatic.
This is where small investors hold a real edge.
With a modest portfolio, you can buy what institutions cannot and be patient while value compounds. The United States remains fertile ground for this approach, with entrepreneurs quietly building real businesses long before the rest of the world notices.
Size hurts performance. Being small is your edge.
This is the same strategy I’m showing a small group of my readers to use.
And next week, I’m going to share a way for you to profit from this corner of the market. Stay tuned.
If you have questions, you can send them to me at [email protected].
And follow me on X here for updates.
Regards,
Charles Mizrahi
Prosperity Insider
