If you have been holding onto your tech microcaps you could be pardon for not realising that the ASX Ords have hit 10 year highs and looking bullish; likewise ASX ********* Ordinaries is not far from emulating that trend. Yet by and large, most tech microcaps have been largely shunned in this bullishness that is confined to very selected quality growth stocks , reflecting the Flight to Quality mantra that I had previously been saying since Feb this year.
The question then is- will these beaten down stocks recover and make its way back ? I think for exuberance to return to these stocks, they probably have IMO 2-3 remaining quarters to prove that their business model will get traction; for most, the required improvement leap won't materialise during that timeframe and some would even require CR further suppressing the sp. Why 2-3 quarters? Because as US interest rates continue rising , higher risk premiums would be required and the market could become a different beast.
Far too many people are not practising good risk management by having a far too high overweight positions in such tech microcaps- they (well most) are not investment value and IMO should never be in the $100k and above bucket.
Unfortunately indecision now is also a decision by default- the wait and see approach for 4C quarterlies would likely yield further disappointment and make selling at that point an even more painful experience.
