The dangers of retail

Asset prices throughout the western world, from property to shares, are at all time highs and show no signs of slowing. Quantitative easing and low interest rates, rather than encouraging new investment and entrepreneurship are simply fuelling price increases in existing assets. Now is the time to be fearful in my opinion, however that doesn’t stop me trying to find great investments even if it is that much harder at the moment.

I recently ran a stock screen of US companies to try and find some interesting prospects. The results were very interesting so I wanted to share them with you, and highlight some possible value traps I noticed going through the list, particularly retailers, along with some stories of my experiences investing in them.

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AIM IT Project

The Alternative Investment Market (AIM) of the London Stock Exchange (LSE) is a great place for investors to find bargains and mispriced securities. A lot of the companies have market caps too small for brokers or institutions to care about, which means small investors like us are left to competed with only each other. But it doesn’t come without its risks: stocks are illiquid with large bid/ask spreads, regulation is more relaxed than the main market and the stock prices are very volatile.

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