Good morning! US markets dipped yesterday evening, so that is feeding through to the UK, where the FTSE 100 is expected to open down about 10 points at 6,423. I like market sell-offs, as they present buying opportunities, especially in smaller caps where it only takes a few clumsy sellers to knock the price back 10-20% in particular stocks, so it usually makes sense to have kept some powder dry, or at least have a bit of gearing available if you don't like leaving cash on the sidelines. Personally I think a modest amount of gearing is fine, providing you're well diversified, and only invest in decent quality companies with sound Balance Sheets. The key driver for me is whether the stock is good value.

The US Govt partial shutdown & debt ceiling negotiations is rumbling on as an issue. Investors may be sanguine for a while, but as it continues, the more likelihood there is of a sharp market sell-off. Hence why I have personally bought some short-dated Put Options on the US market (which drives the UK market), just as an insurance policy to protect myself against the (admittedly small) risk of a big sell-off. It's cheaper to do that then to exit small cap positions, and have to buy back in later at a higher price, and absorb another set of bid/offer spreads, which can routinely be in the 3% area with small caps.

Options are expensive, and usually expire worthless, so I only ever use them rarely, for a specific risk. However, in this case where a resolution of the specific political issues would in all likelihood drive a large rise in markets, I want to remain invested, but also want insurance to protect against a crash. I'm also being wary about opening new positions.



It's a real tiddler, at only £3m market cap, but the final results to 30 Jun 2013 from Aeorema Communications (LON:AEO) look pretty impressive this morning. It's a corporate communication & events company. Turnover has risen from £2.8m to £4.0m, with a profit delivered of £359k, against a £36k loss the prior year. Looks good.

They also have net cash of £1.6m, which is about half the market cap! A maiden dividend is being paid, of 1.5p per share. As is usual with companies this small, several individuals…

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