Good morning, it's Paul & Jack here with the SCVR for Thursday.

Market comment (from Paul)

We've had a brutal correction in small caps especially in the last few weeks. Looking at the futures (FTSE 100 predicted to rise 81 points [as at 07:01]) then this could be a good day for putting some fresh cash to work, grabbing some bargains. The early bird catches the worm. Unfortunately, my longs have taken such a battering in the last week especially, that I don't have any spare cash to deploy, having recycled all my French Connection (LON:FCCN) (I no longer hold) gains promptly into Scs (LON:SCS) (I hold), where I see excellent risk:reward (long term - I've no idea about short-term price).

I feel there have been some unreasonable price drops in good quality small caps, and can certainly see bargains around, for the first time in ages. Although plenty of other over-priced shares have rightly come down in price (and many still look overvalued to me).

I can understand why companies with supply chain risk would fall back a bit, but not to the extent that some have fallen (30%, even 40% can be seen in some cases). After all, supply chain disruption is a temporary factor, and probably isn't going to affect earnings much, if at all, from 2023 onwards.

Although this does have the look of a panic sell-off, because I've noticed plenty of companies with little, or no supply chain exposure (e.g. services companies) also sell-off. Some people, especially relatively new investors, tend to panic sell when things fall, then try to buy back, thinking they can catch the bottom. I've found that doesn't work well for me in the long run.

I'm not going to provide a list of bargain shares - this site is all about doing your own research (DYOR) remember, we're not tipsters, and you already know which shares we rate highly (from a value/GARP standpoint), from our daily commentary.

EDIT: it also occurs to me that companies which put out positive trading updates now, which have seen indiscriminate share price declines, could be a good place to start, in terms of deploying cash, because there's no uncertainty about current performance - which improves risk:reward (the most important investing concept). Whereas buying other companies, which have not yet provided a recent trading update, involves more…

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