Good morning!

I am sorry to read the news that investing legend Jim Slater has died, aged 86. His book, The Zulu Principle was one of the first investment books that I read, and it was instrumental in my decision to focus almost entirely on UK small caps. Rummaging through my bookshelf, I can't find it, so will have to buy another copy, as it's probably about time to refresh my memory.

I hadn't realised that he had such a dramatic, and at times controversial business career, as that was mostly before my time - there is an interesting obituary in today's Telegraph. Certainly he was a major figure in the investing world, and of course is followed by his son, Mark Slater, a highly respected fund manager and commentator in his own right. Mark's insights are always worth listening to - my condolences to him.


Several people have asked me to comment on price movements of individual stocks. I don't usually do that, as these reports are focussed on flagging up, and commenting on trading updates and results statements from interesting smaller companies.

However, I have noticed that this week in particular, there have been some unusual wobbles in quite a lot of small companies, so it looks as if a bit of profit-taking is going on. My observation is that, when you see similar wobbles going on at lots of companies, especially ones which had previously been quite buoyant (e.g. Trakm8 Holdings (LON:TRAK)  or Somero Enterprises (LON:SOM) ), then that can be a good time to top up, if you like the company. (disclosure: I hold a long position in SOM).

If an individual share is dropping for no apparent reason, whilst everything else is strong, then that's more of a concern, as it could indicate that an insider is selling ahead of bad news. However, when lots of things are all going wobbly simultaneously, then there is less likely to be anything stock-specific going wrong, so that scenario gives me more confidence to buy the dips on individual stocks.

That said, I do think that the valuations of a lot of fashionable growth stocks, are now getting into fairly bonkers territory (or have been for a while). If you have to assume that a company will execute to perfection for the next 2-3 years, to even begin to justify…

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