Announcer:
4 Your money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Thank you, Brandy. Appreciate the invite.
Brandy Auterson-Hurst:
So not every part of the stock market has performed as well as the popular market averages recently. Are there any areas that seem particularly weak to you?
David Nelson:
Well, you’re exactly correct. The indexes as a whole, as far as in the US, have done quite well with one glaring exception, that being small caps and small cap stocks. Well, how do you define that? As far as Wall Street terminology, that’s $2 billion and under, those are small cap stocks. I have a chart today that I brought along that will illustrate this pretty nicely. And what we’re looking at here folks is basically a comparison between big companies, so the Microsoft and companies like that, the real gargantuan companies in comparison to small cap stocks. And what this chart shows when you see the line going down, the blue line going down, that means small cap stocks are underperforming large cap stocks. And as you can see, the last decade, that’s certainly been the case and they’ve been under tremendous pressure as far as in comparison, and we don’t even know if there’s light at the end of the tunnel.
Brandy Auterson-Hurst:
Yeah. So is this a potential opportunity for viewers looking to put their investment dollars to work?
David Nelson:
Historically, you would probably say yes. We look at the history books the last time that we had this big a gap between a large cap and small cap it was a wonderful buying opportunity and a long extended run that took place as far as in small caps. Things are different today, I’ll give you the very abbreviated version. A lot of these companies are staying private these days. Subsequently, they’re not the quality companies coming to the market. They’re being bought up by large companies. And lastly, if they go public, they’re going public later. So it’s a tough environment, I’d probably stay away.
Brandy Auterson-Hurst:
All right, David, thanks for your insight today.
Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.
Indices mentioned are unmanaged and cannot be invested into directly.