Big institutional investors, for example, usually don’t venture into the small end of town mainly because of their size. Many of these money managers have hundreds of millions to put to work — they simply can’t invest in smaller stocks. That’s why I’d argue small-cap investing is perfect for individual investors, like you.
As previously stated, China is Australia’s largest trade partner. And the US is Australia’s third largest (with Japan coming in second). The US is Australia’s biggest foreign investor. China comes in seventh spot. So Australia could potentially have trade wins from both nations, if tensions increase between the two.
How often do you take stock? It could be with your career, share portfolio or life in general. New Year’s Day is a popular choice for reflection. Many people use this as a time to look back at the year that was. It’s a chance to consider what went well, or not so well.
Before you can start to find small-cap gems hidden on the ASX, you first need to find gems in the market, and we need to know what small-caps are. So let’s cover some basics. Like the name suggests, small-cap stocks are small stocks.
The price of bitcoin exploded overnight, rising from US$6,870 (AU$8,859.21) to US$8,034.17 (AU$10,360) in an hour, according to prices quoted from Coindesk. There’s no one specific piece of news that can be pointed to as being solely responsible for the sudden jump. Instead, it seems that a number of factors came together at the same time.
There were queues hundreds of people long. The snake of people wound its way up flights of stairs four storeys high. Outside onlookers gathered. Some in awe. Some in admiration. Some in anguish and disgust. They were at Capitol Hill in the US to hear Facebook CEO Mark Zuckerberg testify before Congress.
Investing is not an exact science. Its why there’s no formula or process that will guarantee returns 100% of the time. There are, however, key factors that will determine the price of a stock over time. The most important is earnings power.
Don’t you love how the narrative changes from month to month? Back in the good old days…way back in January 2018, it was all about Trump’s tax cuts and the wonderful effect this would have on stock prices and the US economy. But now, it’s all about trade wars.
China is no longer a copycat of the West. They’re quickly becoming an innovation nation just like they’ve been saying. The government just spent US$10 billion to build a quantum lab. According to the OECD, China is now the second largest scientific powerhouse, behind the US. And as you can see, China is pumping out patents like crazy.
I’m going to talk about valuation…as in fundamental, old school asset valuation. I’m also going to talk investor psychology and how when you get the two of them working together, or in this case against each other, the results can be spectacular. And given the recent controversy over Blue Sky Alternative Investments, I thought it would be interesting to perform an intrinsic value calculation to see where actual value is for the company.