In the days of tech exuberance (August17-mid January18)
All you need was (1) Potential and (2) Price Momentum, for an escalating sp
In the lacklustre period (since Feb18)
For smallcap stocks especially those lacking liquidity, you lack price momentum (confidence begets confidence, likewise diffidence begets diffidence)
Even if you have price momentum, the two elements above are not enough, you also need validation/results amidst increasing scepticism (but some LT holders continue to hold due to confidence in the stock that they bought cheap) (yes short spikes with good announcements on progress but sustainability depends on results).
Beyond the lacklustre period
We can only speculate what is to come,...but if external/internal economic environment turns (from higher rates, other factors e.g tariffs etc) including the Dow falls steeply again, then even validation/results for the low end of town at that point won't be enough..because with the money they have, investors can buy other more fundamentally based stocks like CSL on the cheap or if interest rates rises, they can get a more decent yield on a risk free investment.
That's the nature of smallcaps...they can rise beyond what the actual fundamentals hold (subjective matter) during the period of exuberance but they can also fall steeply over time and stay low for a protracted period as interest and speculation wanes (since most of their demand comes from retailers) especially when market conditions turn for the worse. We've been there before many times but retailers will never learn (that's what makes the market) ....I suspect we are at that inflexion point, DYOR and take care!
