Finally, after the last year’s turbulent market conditions, investors are again beginning to feel comfortable with the microcap arena. Starting in early July and up to the present, the Russell Microcap Index has advanced further than any other market segment, at 6.04 percent.
It is no secret that the volatile nature of the microcap market can sometimes lead to unexpected numbers, but this latest turn-around has even Wall Street puzzling. The past year of economic unrest has given wary investors reason to look away from small companies, and yet the resurgence of small stocks continues.
Some experts believe that the falling price of oil may play a factor in this latest trend. Still others feel that the stabilization of the US dollar is a prime cause, granted that most microcap companies deal largely in domestic currency. Either way you slice it, good news regarding any aspect of our economy must be viewed as a reason to celebrate.
The real question on people’s minds is, how long can this forward momentum be maintained? High performance smallcaps can often signal the exit from a recession, but experts warn that we have a long way to go to achieve that end. Michael Alpert, managing director of J. & W. Seligman believes that the continuation of these latest trends hinges upon the performance of smallcap financial stocks, which he says will still be “stuck in the mud for awhile… We’re not through this financial crisis by any means.”
Let us hear your thoughts below: