Pixie dust and demon dust: The little things that make a big difference in equity markets

Being open minded a good way to spot winners

As equity investors monitor their portfolios, it can be easy to forget that each blinking ticker symbol forms part of a complex whole.

In a modern economy, the relationships between firms and their customers often hinge on crucial little details. Consider an airline whose fleet needs to be maintained with after-market components sourced from third-party manufacturers. These replacement switches and gaskets are cheap compared with the airline's other expenses, such as labour and fuel costs - but without them, the planes cannot fly. Companies that specialise in producing small parts of a larger system are an interesting proposition for equity investors. We think of these firms as offering pixie dust or demon dust (or a...