Good morning! This is turning out to be a cracking week, with a lot of my favourite stocks reporting good, or at least acceptable results amp; trading updates. That’s encouraging, as I’ve had a run of relatively poor performance for about a year, with my long term positions anyway, where I was beginning to think I was a magnet for profit warnings!I was discussing this the other day with a fund manager, and we agreed that with small amp; micro caps, to be on the safe side, you have to assume that everything will warn on profits at least once every five years. That’s a good rule of thumb anyway, and valuations should allow for this – i.e. small caps should be at a discount to the market as a whole, to accommodate the higher risk.So it’s a real problem at the moment when most small caps seem to be priced to perfection. I’m just not prepared to pay 20 times earnings for businesses that have historically been priced on 10-14 times, which is the situation I’m finding with many small caps that I research at the moment.Happily, as we have so many to choose from (well over a thousand UK small caps), there are…
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