The Oracle of Omaha summarizes the best way to invest.
So far in August 2023, small-caps have taken a breather in the marketplace, down more than 5% in the first three weeks of the month. Large-caps also dipped, though fairly in line with the performance of small-caps.
This sort of market action isn’t uncommon following periods where stocks have moved significantly to the upside, as small-caps did from May through July. Perhaps it’s a reflexive action that is allowing investors to digest gains after the flurry of upbeat company reports that have been released in the last few months. Or maybe it’s simply the time of year when Americans often take a vacation (even traders occasionally take some time off), and some of the froth is now being allowed to settle out of the markets.
Economic news continues to be positive, with inflation continuing to fall and the risk of widespread economic contraction remaining low. But as Warren Buffett wrote in his Berkshire Hathaway shareholder letter this year, we “are not stock pickers, we are business pickers.” By using a bottom-up approach focusing first and foremost on well-managed businesses, we look to find opportunities in small company stocks that will benefit past any period in the economic cycle.
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In this issue of the SmallCap Informer we cover another player in the semiconductor equipment industry. This company’s small size has kept in under Wall Street’s radar, but its prospects look attractive, and its growth and diversification strategies may help it survive the tests of time.
Stay the course!
Subscribers can read Doug's complete commentary and in-depth profile of our recommended small company stock in the September 2023 issue of the SmallCap Informer stock newsletter. Not a subscriber? Subscribe to the SmallCap Informer and get monthly small company stock recommendations and updated buy/sell prices for each of the 49 high-quality small company stocks currently covered in the newsletter.