ISCB - Concerned About Market Concentration And Lofty Valuations? Consider Small Caps

2024-06-20 02:55:00 ET

Summary

• If you are wringing your hands over large-cap stocks due to high market concentration and lofty valuations, allocating to small-cap stocks may give you some piece of mind.
• Relative to their own history, small-cap stocks are trading at a big discount to large-cap stocks.
• As of May 31, the forward P/E ratios of small caps over large caps was 73%, which indicates small caps are currently trading at a 27% valuation discount to large-cap stocks.

If you are wringing your hands over large-cap stocks due to high market concentration and lofty valuations, allocating to small-cap stocks may give you some piece of mind. Beyond concentration and valuation considerations, there are several good reasons why this is a good time to consider adding small caps to your portfolio....

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