Why Not To Give Up On Small Caps

Last year, small-cap stocks lagged large stocks by the widest margin since 1998, but newsletter guru Jim Oberweis says not to quit on the little guys.

“Given that small stocks have a long history of outperformance relative to large caps, it would be foolish to give up on them,” Oberweis writes in his Forbes column. “Valuations for high-growth small caps have fallen 20% since January 2014 and are again below their long-term average levels.”

Oberweis also says small caps tend to fare better when GDP accelerates. He thinks cheap oil will be a catalyst for earnings growth, leading to better-than-expected GDP in 2015. He also notes that small companies tend to have less currency exposure than big multinationals, which could be important given the dollar’s surge.