Unhedged The case for small and mid caps
Sep 24, 2024
Aiden Reiter, a notable markets and finance journalist, joins the hosts to explore the intriguing theory that small and mid-cap stocks might outpace the S&P 500 as interest rates decline. They dissect the performance trends of these smaller firms, revealing the challenges they face amid market fluctuations and economic sensitivity. There's also a lively debate on the investment potential of mid-caps and the effects of market concentration. The conversation wraps up with humor around knitwear as they discuss seasonal fashion trends.
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Small-Cap Theory vs. Reality
- Small caps are theoretically riskier, thus should yield higher returns over time.
- This theory hasn't held recently, frustrating investors.
Tech's Impact on Small-Cap Performance
- Small and mid-caps have underperformed large caps, especially those heavy in tech.
- While still yielding returns, they haven't matched the growth of large-cap tech.
Economic Sensitivity of Smaller Caps
- Small and mid-cap companies are more economically sensitive than large caps.
- They're susceptible to factors like interest rates, consumer spending, and labor market conditions.