Mr. Higgons gave us the lowdown on small-cap stocks since 2018. Let’s get straight to the point:
What’s Been Going On:
- Good Old Days: Small caps were on a roll from 2008 to 2018.
- Change in the Wind: After 2018, things shifted. Small caps saw an €8 billion pullout.
- New Kids on the Block: Private equity firms are now in the ring, and they’re tough competition. Their valuation multiples tower over those of small caps.
What’s Next:
- PE Valuation Shift: Expect private equity’s high valuation multiples to adjust downwards.
- Hope for Small Caps: The price-to-earnings (P/E) ratios for small caps are looking up, which is good news.
- Some Might Bow Out: Small caps with lower valuation multiples might opt out of the stock market.
Advice from Mr. Higgons:
- Do Your Homework: It’s crucial to dig into financial reports and avoid companies with dodgy leadership.
- Eyes on Family Businesses: Not every family-run company is looking out for you, the shareholder.
Key Point:
A company’s goal should be to boost shareholder wealth, not just fill the pockets of its executives. This advice from Mr. Higgons is key for anyone thinking about putting money into small caps.
In Short:
Mr. Higgons’ latest talk helps us see the challenges and opportunities for small caps. It’s solid advice for anyone in investing, whether you’re just starting or you’ve been at it for years.