It's likely to be a bumpy day today, with a sharp sell-off in the USA last night, so FTSE 100 futures are currently indicating an open around 100 points lower. Still, given recent bullishness, I think a correction is overdue, and all part of a healthy market. If you've done your research properly, and only invested in good quality companies on reasonable valuations, then days like today hold no fear, just sit back and enjoy watching the traders panic like headless chicken!
The proven best way of consistently out-performing the market is to focus on a value strategy, and to ignore background noise. So I shall be looking for value opportunities.
One such (hopefully) opportunity arose yesterday when Clean Air Power (LON:CAP) suddenly plunged 30% (see chart on left)
It is a blue sky stock, but reasonably priced considering the positive recent trading news, completed fund-raising last autumn, and interesting potential for its Patented comversions which allow diesel engined HGVs to operate mainly on liquid gas. Someone apparently dumped around 11% of the company at 5p a share, so I grabbed some more at 6p just before that trade printed, and seemed to have caught the low. I just hope there is not any bad news in the pipeline, but having done my research already, I knew that the key cash position was fine, so deemed it safe to take the plunge. Let's see how it plays out.
The other thing to consider is that most small caps have much too wide bid-offer spreads to even consider trading in & out of them. Hence you take your position, and stick with it. All the more important then that you've done your research thoroughly.
Just a short report this morning, as I'm off to London for the ShareSoc Investor Day & Members Meeting. There are some interesting speakers lined up, and it will be a good chance to talk to other active investors, and I am hoping to lobby the representative of the Stock Exchange over ways to improve small cap liquidity, and most importantly, to narrow those bid-offer spreads! Wide spreads are the bane of our lives, and completely unnecessary, since all we need is for ALL small cap shares to become SETSmm traded, then we can get our…
