Small/Smid Cap Stocks: The Overlooked Asset Class 2.0
Monday, March 31, 2025
Warren Buffet famously said, “The stock market is a device for transferring wealth from the impatient to the patient.” A key to that investment philosophy is buying value, then patiently waiting for the market to recognize what you already know. Sometimes that wait can test the patience of even seasoned investors, given the relationship between small-cap and large-cap performance has historically run in long-term cycles. We continue to believe a shift from large- to small/smid- caps is underway. While no one can know the precise timing, the list of potential catalysts is growing. This includes large/small relative valuations, declining inflation and interest rates, and relative earnings growth trends, all which point to potential outperformance of quality small- and smid-cap equities over large caps.
