jas, page-10

While I agree with your general warnings that now is the time to be wary as the market continues this strong bull run, I want to comment on your note on institutional investors selling out.

Put simply, there is no chance the recent activity is institutional investors selling out purely because most institutional investors/hedge funds/mutual funds etc. wouldn’t touch micro-caps with a 10 foot pole. They have certain guidelines and restrictions around market cap size (among others) meaning they don’t come into the playing field until certain criteria are met and they are allowed to enter. They have many risk-mitigating strategies with market cap limits being one of the most important.

Micro-cap movements are created by retail interest most of the time. This creates even bigger dangers because I feel that the high majority of these new retail investors have never experienced a correction. They won’t have a clue what to do and their emotions will dictate their actions. This can cause some extreme panic and that’s where your crash in these stocks will occur.