Good morning! It's starting to feel decidedly choppy in smallcapsville - confidence seems to be ebbing away again, with the FTSE AIM ALL SHR (FTSE:AXX) hitting a new low for the year-to-date this week, at 785.8 (down 7.6% on the year, and down 12.4% from the peak on Mar 6 2014). So if your small caps portfolio is struggling a bit, then you're not the only one. A lot of crazy valuations are correcting, but the good are pulled down with the bad, in the short term.

However, as always, good earnings reports should allow quality, reasonably priced companies, to bounce back in due course. Whilst the over-priced, speculative stuff is left behind as euphoria dissipates. It's all part of the usual stock market cycle, and is a healthy process in my view, although nobody likes seeing our portfolios shrink in the short term.

I see that the papers are saying that the Bank of England is going to act because house prices have now reached an astonishing 10 times average salary. That is madness. Although in reality it reflects the fact that home ownership is now closed completely to a large section of lower income people. How sad to see things going backwards in that regard, so that realistically home ownership is only now possible for the middle class, and people who inherit enough to finance a large deposit.

Although housebuilders keep coming up on my value screens, with average prices at 10 times average salary, it's just an accident waiting to happen once interest rates normalise, in my view. Prices have to come down, sooner or later. I think we might have already passed the peak of this latest bubble, so will be steering clear of housebuilders. Negative equity is likely to be a phrase that re-enters our vocabulary in the next few years, in all likelihood.


Wynnstay (LON:WYN)

This is an agricultural feeds (and similar) business, supplying farmers in Wales, the Midlands, and North. I last looked at this share on 28 Jan 2014, concluding that there was little of interest, and the shares looked rather expensive at 650p.

That remains my view after reviewing their interim accounts to 30 Apr 2014, published today. A mild winter saw reduced demand, which is understandable. EPS dropped 18% to 19.4p, which partly…

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