Admittedly, some of that damage is the result of troubles at its largest companies, notably Asos (which has halved) and Quindell, down 69 per cent this year and falling nearly a third this week after a staggeringly ill-conceived director share buying scheme. Plunging commodity prices continue to wreak havoc with the junior mineral explorers that dominate the portfolios of many private investors.
Of course, investing in exploration has always been something of a speculative venture, and we have expressed concern for some time that many junior resource companies would be facing a cash crunch, regardless of the trajectory of commodity prices. We have also regularly advised readers not to overexpose themselves to any one company or sector - the idea that you may back the next Tullow is an alluring one, but the reality of oil exploration is that it is expensive and suffers more misses than it enjoys hits.
We received a great letter from one reader on this very subject week. Having participated in a great number of resource fundraisings in the early 2000s, he observed that the concentration of risk in one country or prospect meant that an investor would have to invest in dozens of companies to enjoy success. That approach might work for venture capitalists, but would quickly bankrupt the average investor. The moral: never let an attractive story get in the way of rational investment decision making.
I am not convinced that many such companies will ever recover – and I certainly do not subscribe to the simplistic investment philosophy that what goes down must come up. But, like Simon, I do believe that in the case of smaller companies the baby has been thrown out with the bathwater this year. Aim is home to many wonderful, well-run small companies across a huge range of industries, even if it is often the more controversial ones like Quindell that attract the focus of investor and media attention.
Small cap fund manager Gervais Williams shares this sentiment. In his new book, The Future is Small, he argues that smaller companies will deliver the greatest returns to investors in the years ahead, and that Aim's diversity means it will be at the forefront of this. His rationale is simple: in a world retrenching from an unsustainable credit boom nimble, entrepreneurial small companies will be better able to grow organically than large, often dysfunctional corporations.
Talking his own book? Maybe. But statistics back him up - the FTSE small cap index has returned 63 per cent in 10 years, against the 39 per cent from the FTSE 100. And as the latest round of bank fines are dished out and supermarkets implode, it's a story that I have little trouble believing.
