Is Now the Time to Buy Small Cap Stoc...
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Tim Lambert
Is Now the Time to Buy Small Cap Stocks?
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The bull market rally for the past five years has rewarded those owing such blue chip stocks as Apple (NASDAQ: AAPL), Caterpillar (NYSE: CAT), Coca-Cola (NYSE: KO), ExxonMobil (NYSE: XOM) (chart below), and many others.  For the savvy investor, that naturally raises the question of, “It it time to start buying small cap stocks?”  Legendary investor Warren Buffett, who is a major shareholder of such mega-caps as Coca-Cola and ExxonMobil has stated that he has learned the most from owning a small cap, See’s Candies.

That could be the case for many other investors, too.

Overall, it appears as if small cap stocks are due for a breakout.  As one commentator notes, “Small caps had a heck of a year in 2013, with the S&P 600 Small Cap Index rising by 34% as compared to 25% for the S&P 500. But the asset class has been a dog so far in 2014, falling by 3.4% as compared to a 7.7% rise in the S&P 500.”

It is likely that many investors will start to shift over to small cap stocks for a variety of factors.

A major reason is that many blue chips are stumbling.  Recent market action has not been kind to Apple, Caterpillar, Coca-Cola, and ExxonMobil.  There are many reasons for that,  of course.  But a major factor is that some investors are starting to trip their positions.

For that and a wide range of other reasons investors should start to consider small cap stocks.

Many offer all that an Apple or Coca-Cola does, as just example.  There are small caps with high dividend yields for income investors.  Growth investors and value investors can select from a vast array, too.  Finding undervalued small caps stocks is easier as institutional investors cannot buy shares of many due to restrictions in the charters.

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