Deupree James Wealth Management exists to help you make smarter investment decisions. That’s why we care enough to do our own research, and even create most of our investment strategies in-house.
On April 24th, 2020 we highlighted one of our unique strategies while making the case for microcaps in your portfolio. If you want to watch the entire presentation you can see it here.
It’s been four months since we published, and we thought you might appreciate an update on how microcaps are performing.
Below is a slide from that presentation. As you can see, since 1929 microcaps typically outperform megacaps after Bear Market Bottoms that are accompanied by a recession.
We updated the chart from our original presentation to include the 2020 data and stock returns have exceeded what we normally observe after a recession. As expected, microcaps are outperforming megacaps since April 1st, but it is worth noting that both microcaps and megacaps are both performing better than normal.
In our opinion investors should be asking themselves two questions. First, is the recession over? Second, have stocks gone too far too fast? After all, we have experienced a typical 12-month post-recession return in megacaps in just 5 months.
Finally, how much risk are you willing to take? As you can see in the slide below microcap investing can be volatile and is not appropriate for everyone. You should carefully weigh the risks and should use an active manager that you trust to help you find the diamonds in the rough.
Give us a call if this is something you’d be interested in us doing for you, and we’ll let you know if it might be appropriate for your situation.
This market commentary is for informational purposes only. Please contact your financial advisor for advice about your specific situation. Past performance is not indicative of future results. Securities offered through Triad Advisors, LLC. Member FINRA/SIPC. Investment advice offered through Goss Advisors, a registered investment adviser. Goss Advisors and Deupree James Wealth Management are separate entities from Triad Advisors, LLC.