Why We Like Small Caps Longer Term, But Are Staying Neutral On Them Near Term

In this edition, Lori discusses her thoughts on the outlook for Small Cap stocks in the US. Three big things you need to know: (1) Lori sees greater opportunity in Small Caps than Large caps on a long-term, 3-5 year view, but prefers a more neutral stance on the two size segments on a 6-12 month time horizon. (2) In terms of stock price performance, Lori thinks Small Caps may benefit more in the short-term from a Trump re-election than a Biden win in this fall’s Presidential election. (3) Lori’s work finds that individual investors on the Robinhood platform have been more engaged with Large Caps and Nasdaq stocks than Small Cap stocks, helping to explain why Small Caps haven’t seen consistent outperformance since the mid-March low in the US equity market.

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