A regular reader of the PROFIT CONFIDENTIAL contacted me to say "Yes, Michael...I agree that that the nature of the economy is changing, but how can I profit from it?"

The change, lest you forget, is really more about jobs and trade. We live "globally" now, so everything is connected in one way or another.

America has lost millions of jobs to China and India and -- no matter what the politicians say -- those jobs are not coming back. It is a dire fact that we will continue to lose more jobs, as predicted by various employment experts. It is a sad fact that we are partly responsible.

Americans are the world's greatest consumers. And, just like shoppers around the world, we like to get a deal. So, goods from China replace more expensive American-made goods on our store shelves. Code writers in India work for a tenth of the wages of an American, and so American software companies outsource to them.

Wall-Mart is now the biggest company in America -- and it's "retail". General Motors used to be the biggest and it was "manufacturing". Things change and people have to adapt. And that includes the way we make money.

Some businesses have trouble adapting. Small businesses tend to adapt faster than large ones because they are nimble and can change direction quickly. Some people and businesses won't adapt because they see no need. Usually, these are the big-cap companies. They are often so set in their ways that change requires massive amounts of cash and willpower.

When it comes to investing, staff at PROFIT CONFIDENTIAL prefers to invest in small caps. These small companies can adapt to prevailing trade and market conditions much faster and cheaper than the "big guys."

Look what is going on. Last year the Russell 2000 Small Cap Index beat the DOW by 106%! Sure, you could have made money on the DOW or the NASDAQ with some big players, but you will always do better with small-caps. Big companies get hit hard in bad economic times...especially when interest rates start to rise. With small-cap stocks, you are often betting on management's capabilities, inventions, new marketing strategies and other avenues for sales and profits. That's why I've always preferred small-caps over the big companies.