Demise of Small Caps Haunts Wall Street Amid Recovery
- Small shares are becoming less profitable overall: Verdad
- Investors threatened by private-market boom, weak new entrants
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Declaring the demise of an asset class is a mistake people have made since the dawn of markets. It’s a temptation many on Wall Street succumbed to recently when small-cap stocks notched two-decade lows versus the S&P 500 – only to rally sharply after the Federal Reserve’s dovish policy surprise last week.
Yet for all the short-term market noise, existential fears surrounding the investing style are long standing and profound. Since markets soured at the start of 2022, the Russell 2000 is still down roughly 12%, while the S&P 500 and Nasdaq 100 have more or less recouped their losses.