As if that wasn’t bad enough itself, add some scared kids into the mix and you’ve got the perfect recipe for a night of terrible sleep.

But as I slogged into the office this morning and began working on the latest investing in small-cap stocks research report for my small-cap healthcare service, Access, a perfectly timed e-mail hit my inbox…

Dear Access Research Team,

I just wanted to let you know that as of today, May 20, barely 5 weeks after becoming a subscriber, my portfolio is up 36% and has surpassed the cost of my subscription. I was very hesitant to plunk down, what was to me, a large chunk of cash for your information but I am glad I did.

I am just a budding investor, having only begun trading seriously this year. I lost money over the last two years trying to learn, but since joining the Oxford Club and Access, I’ve learned valuable strategies that are making me a better investor every day. Thank you for all your efforts and research. Keep up the good work!!!

Most sincerely,

M.R.

Talk about a day-changer! Sometimes, it’s the simplest, most unexpected thing that can pick you right up.

Reading that e-mail reminded me why I turned down several institutional jobs (including an analyst position with one of the oldest investment banks in America) to work for Mt. Vernon Research.

While making rich guys richer is fine, helping subscribers like M.R. become better, richer investors is incredibly rewarding. So allow me to help you do the same today…

Investing in Small-Cap Stocks: Incredible Reward Potential

If you want a shot at incredible rewards, look no further than investing in small-cap stocks – one of my specialized investment areas.

These are companies that Wall Street either tends to ignore, or simply not bother understanding their stories and potential. But their loss is our gain because good small-cap research can exploit that situation.

Then, once Wall Street realizes it’s missed the boat on a stock, it tries to play catch-up by initiating coverage or upgrading it. Institutional buyers then start snapping up shares. These two forces can push a stock sharply higher very quickly.

But for investors who jump in ahead of the crowd, the gains received by investing in small-cap stocks can be stunning.

For example, in Access we’re up:

• 62% on a medical device maker…

• 52% on a misunderstood biotech firm…

• 142% on a bioterror defense company (results as of May 20).

My next report, which should be out in a week or two, is a classic example of a company whose story analysts just don’t get…

This little medical device maker has a best-in-class product that is grabbing increasingly large chunks of market share every year. And what Wall Street doesn’t comprehend is that it can use its reputation and relationships to grab market share in another market that is nearly three times bigger.

Bottom line… I think the stock could easily double from current levels.

Why You Should Invest In Small-Cap Stocks Today

The question is… how do small-cap stocks fit into today’s turbulent market?

It’s no secret that I’m bearish on the overall market.

But even if the broad market heads lower, there are still enormous opportunities in small-caps. Companies with revolutionary products that lower costs for consumers and improve efficiency should do very well even in a tough economy.

And when we do come out of recession, there’s no better area to be than small-caps. That’s because they historically lead the market higher out of difficult times. For example, small-cap stocks…

• Beat large-caps every year between 1974 and 1983.
• Outperformed large-caps for the vast majority of the years between the Great Depression and the end of World War II.
• Trounced large-caps by about 40 percentage points from the top of the market in 2000 to the next top in 2007.

So what are the best ways you can position yourself to take advantage of investing in small-cap stocks?

Investing in Small-Cap Stocks: Four Opportunities To Consider

If you want to head down the ETF route (which give you the ease and flexibility of trading like stocks, typically have lower costs, and allow you to diversify your portfolio through just one investment), you could buy…

• Vanguard Small-Cap ETF (NYSE: VB)

• Vanguard Small-Cap Growth ETF (NYSE: VBK)

You could also choose mutual funds like…

• Vanguard Tax Managed Small-Cap Fund (VTMSX), which has a very low expense ratio

• Vanguard Explorer (VEXPX)

Note that neither Mt. Vernon Research nor I have a relationship with Vanguard. I just think they run good, shareholder friendly funds.

And if you want to drill down even further and profit from individual small-cap stocks, I invite you to take a look at my “Xcelerated Small-Caps” column in the Xcelerated Profits Report (I have a new recommendation in the June issue, due for release tomorrow), or in my small-cap healthcare service Access.

Whatever you decide to do, be sure to include small-cap stocks in your portfolio, particularly right now. Having them in mine, allows me to sleep well at night… weather and children permitting, of course.

Marc Lichtenfeld

Source: Investing In Small-Cap Stocks: Four Investment Opportunities To Consider