The benchmark indices posted their second consecutive gain this week. The Dow added 0.8%, the S&P 500 gained close to 1%, and the Nasdaq Composite rose 0.9%. Investors largely shrugged off economic slowdown fears and are awaiting the Consumer Price Index report to be released on Friday. The stock market has been on a turbulent ride this year due in large measure to the Federal Reserve's aggressive stance on inflation and to the Russia-Ukraine war. Despite the downturns, there still might be investment opportunities to be had in the market. In this regard, we think fundamentally sound small- and micro-cap stocks could be good investments now. A micro-cap stock is a small company with a market capitalization of between $50 million and $300 million.
Daniel Wolfe, President and Portfolio Manager of 180 Degree Capital Corp. (TURN), a publicly traded closed-end fund, stated, “Interestingly, using history as a guide, we see the current sell-off as an opportunity as it relates to the small/microcap market generally. In fact, the small-cap market, which includes micro-cap companies, is the only major asset class to outpace inflation during every decade since the 1930s.”
