...If water is like cash, it too finds it's own level on the way down. Who thinks of a sell off as a watershed event, well I do. When a sell off occurs it's like a water run off with very little in the way to stop it especially buyers thus looking like a free fall, but remember nothing is free, especially a fall. Some cash is actually profit taking as the market falls in a cash landing.
The cash ends up in a pool of other cash forming buying power the size of Niagra Falls. This cash sits around searching for opportunities and new landing spots. Redeployment of cash is incredibly difficult the larger it is and speed is of the essence. Fast moving markets are like the Snake River rapids, tricky and dangerous and may be harder to navigate than a flow of red tickets that we know eventually will stop.
MicroCaps thirsty for investors are like the last stocks to catch any cash but some capital flows to some of the narrow tributaries and into some microcap companies. Generally speaking the current sectors in favor are Life Sciences, Technology, and Homeland Security. Quality companies attract capital first and then trickles down to start up and ramp ups, more speculative companies.
For some companies this capital is a life preserver or a life raft to a major funding event. When the market drops as it has recently, selling pressure easily turns and becomes buying like a flash flood.
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