ISCB - Rotation Into Small Cap Stocks

2024-07-12 15:15:00 ET

Summary

• Yesterday, a strong rotation took place out of mega cap stocks into smaller cap stocks.
• Thursday was only one day, but the Mag 7 did not fare well, with the MAGS ETF down almost -4.5%.
• The market thinking is a rate cut will stimulate the economy, with small company stocks having the most leverage to a positively growing economy.

Over the course of the last six months, I have written articles about our firm adding small company stock exposure to our client portfolios. The last article was in January and titled, Time For Small Caps?. These additions began in September of last year and another addition in January this year. As a firm, we had been out of any small company stock exposure since 2013, which has been the correct decision as large cap stocks have significantly outperformed small caps since that time. Yesterday though, a strong rotation took place out of mega cap stocks into smaller cap stocks....

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