Good morning!

The falling main Indices seem to be rubbing off on small caps, which was bound to happen sooner or later. In particular, I've noticed that some of last year's fashionable growth stocks, which had run up to racy valuations, seem to now be coming back down somewhat.

With the lack of liquidity in many small caps, it doesn't take a lot of incremental buying or selling to move the price a lot. Therefore inflated prices can be a bit of an illusion - the price is on your screen, but you couldn't sell any decent quantity for that price.

In my first report of this year, I commented that investors had become complacent, and that it looked a good time to take some money off the table, because growth stocks in particular had seen a very strong 2015, and seen a one-off re-rating to a much higher PER. Perhaps we're now seeing a bit of mean reversion, with investors less willing to price growth stocks to perfection?

It's always worth thinking about risk:reward. If something is fully priced already, where's the upside? It might continue rising on momentum in a bull market, but are we still in a bull market? The jury's out on that, but it's starting to look like the beginning of a bear market to me, or at best maybe just a sideways market.

Proactis Holdings (LON:PHD)

My latest CEO interview was recorded yesterday - here's the link.

Hopefully my interviews give a flavour for the type of people running companies that I like, and allow us to dig into key issues - with most questions submitted in advance by readers. If people like them, I'll keep doing more.


Mothercare (LON:MTC)

Share price: 218.5p
No. shares: 170.8m
Market cap: £373.2m

Trading update - this was issued yesterday, but I overlooked it, so given my focus on retailers, let's go back and check it out.

I like the summary box (see below) at the start of the RNS - anything which helps investors quickly assimilate the key points is very helpful, since we have so many announcements to absorb rapidly whilst still bleary-eyed, between 7-8am - the most important hour of the day. Providing of course that the summary is accurate, and not just cherry-picking the positives! (often these things do get over-PR'd! Which of…

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