Daily Gains Letter Warns Investors to Stick with Large-Cap Stocks as Small-Cap Stocks Lag

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Daily Gains Letter advises investors to stick with large-cap stocks due to the current economic climate.

Daily Gains Letter (www.DailyGainsLetter.com), an e-letter published by Lombardi Publishing Corporation, a 28-year-old consumer publisher that has served over one million customers in 141 countries, is warning that in the current economic environment, investors should continue to stick with large-cap stocks in the near term as small-cap stocks lag.

“For investors in small-cap stocks, 2014 has been a departure from 2013, when the sector was raging and sizzling on the price charts,” says financial analyst George Leong. “Small-cap stocks are the laggards this year, with the benchmark Russell 2000 down nearly 14% from its peak and established in a bear market. The selling may be somewhat extreme at first glance, but consider that the Russell 2000 surged an excessive 33% in 2013.”

Leong explains that the strong gains made by small-cap stocks in 2013 were, for the most part, unwarranted, driven by the easy monetary policy put forth by the Federal Reserve, robust share repurchase programs, and excessive froth in the stock market. Small-cap stock investors are now paying the price for the euphoria encountered in 2013.

“Small-cap stocks continue to be an excellent longer-term play, but the short-term looks weary given the technical breakdown of the Russell 2000 chart,” he adds. “As a result, investors have been dumping higher-risk small-cap stocks. Should the global economy rebound in 2015, small cap stocks could experience a rally.”

While the International Monetary Fund has a gloomy outlook for global growth, it did upgrade its forecast for the U.S. The IMF now expects the U.S. economy to grow 3.1% in 2015. The global economy is projected to improve 3.8%, down 0.2 percentage points from the July forecast. (Source: Talley, I., “IMF Cuts 2015 Global Growth Forecast to 3.8%,” The Wall Street Journal, October 7, 2014; http://online.wsj.com/articles/imf-cuts-2015-global-growth-forecast-0-2-percentage-point-to-3-8-1412686808.)

“For now, risk-adverse investors may want to think about shifting their money to large-cap or blue-chip stocks that have been battered this year. Buying mature, consistent large-cap stocks on weakness makes sense, as these companies have proven themselves to be steady players over time,” Leong concludes. “Small companies tend to struggle if the economy underperforms. Compared to the larger companies that can deal with several quarters or even years of underperformance, small-cap stocks would have a much more difficult time.”

For more information on Daily Gains Letter, visit www.DailyGainsLetter.com.

Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, visit www.lombardipublishing.com.

Contact Info:
Name: Wendy Potter
Email: Send Email
Organization: Lombardi Publishing Corporation
Address: 350 5th Avenue, 59th Floor, New York, NY 10118
Website: http://www.dailygainsletter.com/

Release ID: 66679

CONTACT ISSUER
Name: Wendy Potter
Email: Send Email
Organization: Lombardi Publishing Corporation
Address: 350 5th Avenue, 59th Floor, New York, NY 10118
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