A revised view of stock size effects has led to pro-active investment strategies designed to compensate for less efficiency at the bottom end of public securities exchanges. Some market analysts refer to a "private capital market" aspect to these, given the onus placed on investigating and evaluating small-cap enterprises, selecting those that suggest financial promise - from a growth and/or value perspective - and closely monitoring development over time. Of equal importance in a trading environment characterized by fluctuation are risk control techniques, based on strict buy-hold-sell disciplines. Of course, these are management-intensive tasks and imply transaction costs.^{Endnote 83}

The colloquial market expression for this approach is "stock-picking." Tactical considerations associated with it are, not only what small-caps should be added to a portfolio, based on data gathering and analysis, but when, since reversals can be anticipated. Investing in low-capitalization probably also benefits from knowledge of change in the national economy and in specific industries, as the stock's underlying business is frequently sensitive to cyclical downturns and structural developments.

To a degree, such stock-picking methods apply to most trading. They are, however, most appropriate for value- adding small-cap specialists able to target prospects in a large population of issues, invest early, maintain a patient focus and, in some instances, help investee firms overcome immediate obstacles. Other investors may be more content to tap into the yields presented in market swings through broad public equity portfolios, both domestic and international, and passive indexed pools. Still others eschew small-cap investment altogether, believing that return cycles do not justify the costs and risks.