No single ticker was named. Dividend & value ETFs are one way for retail investors to get exposure. Not a recommendation.
Small and micro-cap value poised to outperform
The guest argued that extreme market bifurcation and historically wide valuation spreads set up small, micro, and mid-cap value stocks for a multi-year period of outperformance.
The argument
The guest noted that current market overvaluation resembles the 2000 dot-com peak, where a highly bifurcated market preceded a 10-to-15-year bull run for small-cap value. He pointed to early signs of a reversal, such as the equal-weight S&P 500 (RSP) and small-caps beginning to outperform the market-cap-weighted index, alongside a bottoming of small-cap earnings.
The thesis, stress-tested
✓ What validates it
- ✓Continued outperformance of RSP relative to SPY
- ✓Sustained upward revisions in small and micro-cap corporate earnings
▸ Risks discussed
- ▸Small and mid-cap earnings could resume their decline
- ▸Large-cap growth momentum could persist longer than historical averages suggest
Hear it yourself
"So how do you think about, you know, what these valuation these these market valuations, what do they tell you? What do they don't? And how are they useful for the investor, do you think? Yeah. I think it's it's tempting to look at those market valuations and get scared out of the market. That's that's, and that's a mistake, I think. The, the market overvaluation is really well documented, and it's you know, the adviser perspectives website has they they track, like, six or seven different market level valuation metrics. There's Shiller"