Get Ready to Buy

"Over the years, small-cap stocks crush their large- and mid-cap peers."

That's how I planned to open today. By now, I'd be making my case -- dropping names like Nagel and Quigley and 70 years' worth of Ibbotson data.

And by ... now! My inbox would explode. "Your numbers are skewed by abnormal years," you'd be shouting, or "What about survivorship bias?" And you'd be right. It's the fatal flaw with all historical data: The future ain't the past.

So forget the numbers

Fortunately, you don't need Excel to know that the mega caps of tomorrow are mostly small fries today. But you do need a few clues to find them before they take off. History suggests we're after a smallish company ...

And one more thing: Assuming the stock hasn't hit Wall Street's radar yet, there's a decent chance we'll benefit from pent-up demand when earnings and revenues pick up and the sell-side analysts finally catch on.

What do I mean, "zealots"?

Remember the late Dave Thomas, the lovable face of Wendy's (NYSE: WEN)? Or how about Herb Kelleher, the no-nonsense peanut-loving founder of Southwest Airlines (NYSE: LUV)? Even those "don't be evil" guys from Google (Nasdaq: GOOG) will do, though I bet you can't pull their names (hint: Larry Page and Sergey Brin).

You don't need to check these guys' insider holdings to know they have huge stakes in these businesses. And, thankfully, there's one more like them born every day. That's the beauty of the stock market. It lets us hitch our wagons to the folks who are building tomorrow's success stories.

Which is not to say that finding them is easy, but it can be done. More than anything, we need to be patient and pick our spots. Even better, we can take a cue from Tom Gardner's Motley Fool Hidden Gems method and seek out companies with market caps of less than $2 billion that offer:

Just remember those five keys

Way back in the '80s, they led artsy types like my pal Ricky to Adobe Systems (Nasdaq: ADBE) -- a stock that packed on more than 10 times its original value during the '90s alone. One in a million, you say? Not really. Much the same happened with Scott Cook's Intuit (Nasdaq: INTU).

Not a techie? No worries. As a stock guy, I caught Joe Ricketts' enthusiasm for what is now TD Ameritrade (Nasdaq: AMTD), back when online brokers were just catching on. Meanwhile, millions were discovering Pierre Omidyar's eBay , though you had to be quick to get in early on that one.

More recently, those same five keys led Tom Gardner and his team to a dozen small-cap stocks that have doubled over the past three or so years. (In the spirit of full disclosure, I'll give you the whole story. As of this morning, the Hidden Gems picks are up an average of 58%, versus 24% for the S&P 500.)

Is this market killing you?

Honestly, I feel your pain. I've been feeling the pinch a bit, too. Could we feel a little more pain? Maybe. Could we suffer the 10% correction everybody's waiting for? Sure. But I'm not buying the rumors that this bull market is over.

No way. I've got some dry powder, and I'm already looking to buy. You can bet I'll keep looking. Of course, that's why I always have a wish list of great small companies on hand for times like this. You need one, too.