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Message: Small-cap stocks first to recover from a recession

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Quarx

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Small-cap stocks first to recover from a recession

posted on Jan 09, 09 03:46AM

An interesting divergence is developing between large-cap and more nimble small-cap stocks. Historically, small caps recover well before traditional economic barometers like GDP growth, employment, and earnings estimates.

Since the Great Depression small caps have rallied more than 50% on average after the broad market hits its mid-recession low.

A surge in liquidity eventually lifts the overall market, which is why the outperformance of small caps is a bullish indicator. In other words, there could be very lucrative trading opportunities in small cap stocks as the smart money gets off the sidelines and back in the game.

The low cost offers minimal downside risks and we all know where the industry of REE mining is heading...up.

Bullish? Not quite YET but I am very optimistic right now

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