Is it time to invest in small cap stock given their cheapest valuations in recent history? Not so fast says Morningstar:
https://www.morningstar.com/markets/markets-brief-is-it-finally-time-buy-small-cap-stocks
Some years ago, we had an advisor that put us with tilts toward international, small cap and SCV. None of which did anything during those years. When we fired him, we lightened up those tilts some, but figured that giving up would surely mean they would skyrocket. They haven't, we continue to bleed opportunity cost as the S&P has lapped us, but at least we have more volatility 🙁 . Like a lot of "factors", once the size factor was "discovered" and publicized, it seems to have lost its mojo.
But who's to say what the future holds.
Funny you should say "figured that giving up would surely mean they would skyrocket". Today Russell 2000 is skyrocketing, yesterday I sold some mid-small cap index fund (not a lot) with the idea to invest in larger cap stock index fund based on what Morningstar said, just hilarious 😆.
There's a lesson(s) in there somewhere. Such as don't pay any attention to "professionals", buy and hold, diversify.....
O come on 🤨. Compare this link to the link on my first posting in this thread:
Investment managers will likely be looking at small-cap and mid-cap stocks for growth, with 60% believing they will outperform large-cap stocks over the next one to three years. Respondents see the best results from small-cap stocks, with 43% looking to increase their investments in this class of equities, while 28% would look to add midcap stocks to portfolios under management.
Over the next year, nearly one in five investment managers will look to decrease their holdings of large-cap stocks, while an additional 37% said they would expand investments into international stock markets. Twenty-seven percent more said they would expand their emerging market equities portfolio.
