Good morning!

I'm back from a long weekend in Warsaw - it was really good to have a change of scene. All was great, apart from being ripped off by an illegal taxi driver, and a stag party on the plane back who made the flight a misery. The airlines really do need to do something about this increasing problem.

Mello Beckenham

A reminder that David Stredder's popular, and long-running monthly investor evening is happening today - click the blue link above for more details. The popular & very capable David Cicurel of Judges Scientific (LON:JDG) will be updating investors on progress this evening.

I probably won't be able to make it tonight, as I'm working in North London this afternoon, helping a private company. I'm taking on some NED roles in smaller, private companies with good growth potential, to help them with finances, and strategy/planning. All good fun, and it's enjoyable to do something a bit more hands on.


Sprue Aegis (LON:SPRP)

Share price: 142p (down 47% today)
No. shares: 45.9m
Market cap: £65.2m

Profit warning - you know straight away, when a share price is down 47%, that the profit warning is a bad one. Also, there has been no bounce in the share price yet, Such an initial bounce often happens for 2 reasons;

1) The early drop can be exaggerated by forced sellers at spread bet companies - whose positions are cut at any price, once the stop loss is triggered. It's important to remember that there can often be considerable "slippage" with stop losses - i.e. your spread bet can end up being closed at a far lower price than the stop loss you set. A stop loss is only a genuine stop loss if it's guaranteed, and you have to pay extra for that. Any share that gaps down at the open can make a mockery of a (say) 10-20% stop loss. The actual loss can be considerably more.

2) Existing holders are often anchored to the previous share price, and wrongly see the reduced price as a buying opportunity. This is down to psychological factors, and often an underlying desire to support the share price. This is due to the increasing pain of the losses on their existing shareholdings. It's nearly always a mistake to steam in and increase your existing…

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