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"While many investors are wondering whether it’s safe to start buying those mega-size companies that led the last bull market, it’s actually small-cap stocks that may be the biggest bargains."
"For smaller-company stocks, price/earnings ratios—a widely used measure for determining the value of a stock relative to its earnings—have reached their lowest levels in two decades. Lower ratios generally represent more attractive values and with a greater potential for price gains."
Whaddya know, my small-cap fund (VTMSX) became an even bigger bargain today!
"Small-caps outperformed during recessions in the 1970s and early 1980s, when the Federal Reserve was fighting high inflation, as it is now. The group has higher proportional exposure than large-caps to inflation beneficiaries, like energy. It’s also more domestic and more tied to capital spending, which is a plus if U.S.-based manufacturers continue moving factories home. But small companies generally have less financial flexibility than large ones, which is a negative if borrowing rates stay elevated.
One way for investors to add small- cap exposure is with a low-fee index fund like the iShares Russell 2000IWM –2.75% exchange-traded fund (ticker: IWM). Then again, switching indexes might be an upgrade. The S&P SmallCap 600SP600EQ –2.60% index has outperformed the Russell 2000 index by more than a percentage point a year over the past five, 10, and 20 years, and has generally been less volatile. The biggest reason: S&P uses a profitability screen to admit index members. SPDR S&P 600 Small CapSLY –2.81% ETF (SLY) is one fund option there.
If a profitability screen helps, how about a value tilt? The aforementioned indexes weight small-caps by market cap. Asset manager Research Affiliates has an index that weights them by fundamental measures of value like sales, cash flow, and dividends. Investors can buy in through Schwab Fundamental U.S. Small Company Index ETF (FNDA). It’s more expensive than the other funds, but still cheap, with yearly expenses of 0.25%. Since inception in 2013, the fund has returned 7.4% a year, beating the Russell 2000 by nearly a point through Sept. 30."
"For actively managed funds that are open to new money, Columbia Small Cap Value II (NSVAX) and Wasatch Core Growth (WGROX) get high marks from Morningstar. Each costs a little more than 1% a year and has beaten its category by about a point a year over the past decade."
Small cap extremely cheap
Maybe coil sideways or more upswings next few months waiting Feds direction
We been trading buy more IWM /buy more IWM recently, rsi not bad mid 50s, macd holding stable Perhaps more uptrends
We also trade weekly TNA put sales 15% strike prices lowered Delta, collect small premiums
Better SC ETFs are IJR, SCHA, SLY, VIOO, etc.
I agree with yogibearbull on the Russell 2000.
The S&P 600 is a better small-cap index.
How will small caps perform next year? No one really know for sure and that ought to depend on how severe the recession will be.
For some reason not apparent to me, the revenue weighting pushes it into the value box.
Small-caps generally don't do well in severe recessions.
Today situation is complicated from having strong employment and high consumer spending while there are signs of slowing manufacturing. Housing sector is doing the worst so far. There has been much discussion on the severity or even soft landing.
Bring on those higher-rate CDs.
You may want to consider VTMSX in taxable accounts.
Not a truly passive fund because it's managed with tax efficiency in mind.
The fund's principal investment strategy is listed below.
"The Fund purchases stocks included in the S&P SmallCap 600 Index—an index that is made up of stocks of smaller U.S. companies—in approximately the same proportions as in the Index.
To improve tax efficiency, the Fund may limit investments in Index securities that have undesirable tax characteristics and may continue to hold securities no longer included in the Index."
In addition to VIOO mentioned above, iShares Core S&P Small-Cap ETF (IJR) is also an option.
I have been a fan of the Pacer Funds Cash Cows method, and I have made a commitment to COWZ. Historically this ETF has been slotted in MCV, but its portfolio now is decidedly LCV. Curiously, the Pacer SC fund (CALF) is nowhere near as successful as RWJ or AVUV or BRSVX, the SCV funds I follow, even though it follows a seemingly winning formula. I think Mebane Faber at Cambria funds has a fine method called Shareholder Yield, but only one of his funds (SYLD) can be called outstanding. It, too, has morphed into a LCV after a history of holding SMID stocks. His foreign and emerging market shareholder yield funds have middling records.
Bought FYLD and IHDG for the foreign dividend sleeve of my taxable account. Everybody says you're supposed to have some foreign. Their standards seem like reasonable hurdles.