| The world's stock markets have taken a hammering | | | | smaller companies that are a direct result of the |
| in 2008 with pretty much every single listed company | | | | credit crunch. The vast majority of these companies |
| seeing huge falls in their share price. Both large and | | | | rely on credit to grow their businesses in a healthy |
| small companies have been affected but smaller | | | | economy, but in this weak economy when people |
| companies have been hit particularly hard and are | | | | have less money to spend, a lot of these businesses |
| looking really weak, so is it now worth buying shares | | | | need credit just to survive. However as has been |
| in these companies or not? | | | | mentioned in the news on numerous occasions, the |
| Well my own personal view is that these smaller cap | | | | banks just aren't lending money at the moment, |
| companies should be avoided, at least for now. There | | | | which is a crippling blow for small businesses. |
| are very few buyers out there generally, and the | | | | The secret to successful investing is to buy profitable |
| investors that are buying are predominantly buying | | | | companies at low prices and hold on to them for |
| shares in solid profitable companies that are most | | | | several years when you should hopefully see |
| likely to survive the impending recession and be in a | | | | substantial gains. However at the moment you |
| strong position when the economy recovers. | | | | cannot be confident about any small cap companies |
| While there are a few smaller companies that are | | | | because quite simply you do not know if they will still |
| doing well and likely to survive the credit crunch, they | | | | be in business in a few years time. |
| are definitely in the minority. Furthermore even the | | | | These are really tough times and smaller companies |
| ones that are profitable are still largely out of favour | | | | are finding it particularly difficult, so my own investing |
| with investors because at the moment people are | | | | strategy is currently to ignore all small cap stocks and |
| looking for safe shares to invest in, and this generally | | | | focus on the larger companies that have a long |
| means the largest and most established listed | | | | record of income growth and dividend growth. These |
| companies. | | | | companies are the ones best equipped to deal with |
| There are also real fundamental problems with these | | | | the forthcoming recession. |