In this episode of State of the Market from last year, Chief Income Strategist Marc Lichtenfeld declared that “adding small caps to your portfolio is critical for your investment success.”
The video was recorded in early 2023, but since then, the outlook for small caps has gotten even better.
At that time, it was widely known that the Fed wasn’t done raising rates. In fact, there were four rate hikes in the first eight months of the year.
But now, the market almost unanimously expects a rate cut – perhaps even a 50-basis-point cut – at the next Fed meeting in mid-September. That means lower borrowing costs, which is a huge help to small cap stocks since they often have to take on significant amounts of debt to fund their businesses.
Also, when this episode originally aired, the Russell 2000 index was trading at half of its price-to-earnings ratio from a year earlier. But since then, its P/E has dropped by another 34%!
And Marc isn’t the only one who’s bullish on small caps.
Just look at these news headlines from the past few days…
‘Small caps hold the key’: Investing ideas beyond the S&P 500
Small-Cap Stocks Remain Cheap Vs. Large Caps, Analyst Says
Op-ed: Small caps could be in for a revival. Here’s why
With experts all across the market projecting a small cap surge, the time to get in is now.
Click the image above to watch Marc’s State of the Market episode on how to put small caps to work for your portfolio.
Enjoy!
