How do you decide which equities to buy? Many people rely on the ‘comfort of the crowd’. Preferring to follow what others do to steer them through the markets. Like passive index trackers, this is fine up to a point, say when investing in highly liquid FTSE100 companies. But what about microcaps, where daily trading volumes can be much thinner, and the ‘crowd’ may not exist? Here instead, active fund managers typically focus on the fundamentals and back their own judgement to guide decision-making.
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Valuation rises to 95p/share
How do you decide which equities to buy? Many people rely on the ‘comfort of the crowd’. Preferring to follow what others do to steer them through the markets. Like passive index trackers, this is fine up to a point, say when investing in highly liquid FTSE100 companies. But what about microcaps, where daily trading volumes can be much thinner, and the ‘crowd’ may not exist? Here instead, active fund managers typically focus on the fundamentals and back their own judgement to guide decision-making.