Saturday, June 14, 2008

Why do small-cap companies rebound better than bigger companies?

Small caps do well emerging from a bear market because they get pounded during a bear market.

With less financial and market muscle than bigger companies, they have the reputation of not faring as well when the economy slows.

Investors consequently flee to bigger and supposedly safer companies.

So when the economy and market begin to look up, these maligned small companies need - and get - a bigger bounce just to get back to "normal" valuations.

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