Saturday, August 4, 2007

Investing in Small Caps

70 Times Better Than the Next Microsoft

That's a persuasive case for putting small-cap value stocks to work in your portfolio. (We'll get to just how persuasive later.) And you've probably seen plenty of other data showing that small caps outperform large caps and value outperforms growth. Why, then, doesn't small growth outperform large growth? And why does small growth, on average, end up being the worst choice for your money?

Moneychimp.com offers a theory, and I think it's worth seriously entertaining, at least when it comes to how you invest in small caps. Just think about how investors might mentally categorize large- and small-cap value and growth companies.

70 Times Better Than the Next Microsoft

No comments: