Could Investing in Small Cap Stocks Be The Next Big Opportunity?

Are small-cap stocks on your radar at all?

While big-name companies (hi, NVIDIA!) dominate the headlines, smaller, lesser-known companies might be where the real opportunity lies.

🎙️In the new episode of the Investing & Other Stories podcast, we welcomed the incredible Rayna Lesser Hannaway, CFA, Portfolio Manager at Polen Capital.

With 29 years of small-cap investing experience (like covering Amazon back in the 1990s when it was just an online bookstore!) Rayna gave invaluable insights into smart investing in this space.

SAVE, BOOKMARK, SCREENSHOT, Do whatever you have to do to NOT miss this episode. It’s full of gems about what investing in small stocks really looks like.

🔥 My key takeaways from our conversation:

1. Small Caps Could be Well Positioned for a Comeback:
The valuation difference between Small and Large Caps is near an all-time high (as in, small caps are as cheap as they’ve ever been). Rayna reflected on the admittedly long-term cycles where Large & Small Caps historically traded leadership.

2. Active Funds beat Index Funds in Small Caps

> 2/3 of active funds beat the Russell 2000 Growth index over 10 years (Source: Morningstar).
Time to rethink your “I only invest in index funds for everything” strategy?

Why are active funds good for small caps? Over 40% of the companies in the small growth universe are unprofitable, making active management in the space crucial for risk control and smarter stock selection.

3. Succeeding as a Small Cap Investor Requires This 👇

Avoiding the landmines is just as important as picking the winners.
Focus on leaders who execute well and are smart capital allocators. It’s not just about vision. Great companies take time to grow. Stay patient and adjust your strategy when needed.

4. 📕 Three Not-Obvious Books to Sharpen your Investing Skills 
-Thinking in Bets by Annie Duke (a pro poker player on decision-making under uncertainty)
-The Outsiders by William Thorndyke
-Great by Choice by Jim Collins.

5. And My Favorite Part of The Conversation:

How traditionally considered feminine traits, like multi-tasking and long-term thinking, are not just excellent skills for investors­-they are superpowers! 💼

And much, much more.

🎧 Listen now on Spotify and Apple:
Apple Podcasts
Spotify

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