Investment management can be a brutal business. When you're talking small caps, the brutality is amplified orders of magnitude.
Between March 20 and September 3 last year, the ASX Small Ordinaries Index sky-rocketed 44.38%. That's the kind of performance that will make a fund manager euphoric, but also nervous. Mean reversion is a thing.
Eventually, you need to pay the piper for that kind of performance. And pay the piper the small cap sector most certainly did, in the form of a 25% downward correction.
But just as what goes up must come down, what goes down will eventually go up. And we may have passed that inflection point, with the Small Ords Index up over 11% in the last month.
In this episode of The Rules of Investing, Livewire's David Thornton sat down with Donny Buchanan, Co-Founder, CIO and Portfolio Manager for the Lakehouse Small Companies Fund.
Donny's fund has been swept up in the sell-off. But frankly, so has just about every fund. What's important is how they set themselves up for the recovery. You make money in the buying, after all.
Donny discusses the problems associated with valuing tech growth, the importance of believing in and sticking to your fund's mandate, and the lessons he's taken away from this latest sell-off.
He also offers up a small cap tech stock that is quietly forming a monopoly by creating its own ecosystem.
Abnormal returns
Skamvougeras: Forgotten opportunities
Watling: Australian recession is still my base case
Steve Johnson: The search for extreme dislocations
Aitken: Trade wars present ‘tremendous opportunity’
Ben Griffiths: Markets are at an inflection point
Finding the next Macquarie Bank
Dr Philipp Hofflin: Beware of the widest moats
Tim Toohey's macro masterclass
A century of dividends
Platinum and Magellan: Inside the minds of Australia’s most successful global investors
The hottest investment theme on Earth
Investing in Global Disruption with Jeff Cole
Padley: The problem with buy and hold
Cooper reviews the Cooper Review
Platinum: The opportunity of a generation
Chris Stott: One last call
Fresh ideas from Future Generation
The value in being contrarian
Matthew Kidman: Uncut
Create your
podcast in
minutes
It is Free
The emPOWERed Half Hour
U.S Property Podcast
Aligned Money Show
Dubai Property Podcast
The Ramsey Show
The Clark Howard Podcast