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Market Comment - May '23

May 2023

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

The fall in the FTSE Small Cap ex IT index since 2 February suggests that the next leg in a larger bear market has started, and the bounce from March is just a temporary reprieve. It helps to see this in a broader context. Smaller companies tend to be more reliant on bank lending than their larger peers, so action in the banking sector does matter.   In the US and Europe, demand for loans is declining, a clear sign of economic slowdown, and banks are  tightening lending criteria. This unfolding weakness is not yet matched by a decline in inflation because the rising interest rate medicine works with a time lag. But in the meantime stagflation persists. It is all the more difficult in the US as their banking crisis will mean that e ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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