Understanding Small-Cap Rotations: Are They Effective?
Tuesday, 30 July 2024, 19:54
Can Rotation Into Small-Caps Work?
Investors often ponder if they should rotate their portfolios into small-cap stocks and what such a move entails.
Absolute vs. Relative Performance
Understanding the difference is key. Small-cap stocks can sometimes yield impressive returns relative to larger companies, particularly during specific market conditions. However, considering absolute performance is also vital.
- Market Conditions: Small-caps tend to flourish in bull markets.
- Volatility: These stocks can be more volatile than their larger counterparts.
Conclusion
Ultimately, while investors can gain from small-cap stocks, the decision should be based on comprehensive market analysis.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.