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Benzinga
Benzinga
Business
Stjepan Kalinic

The Upside-Down Market: Why Small-Caps Are a Valuation Trap

Small Cap, stocks

Small-cap investing used to come with a caveat. Smaller companies were cheaper, scrappier, and more leveraged. They came with higher risks, but potentially higher rewards for investors who went down the rabbit hole and put in the work.

For those who hunted a discounted ETF deal, investing in smaller caps typically meant buying the Russell 2000 when sentiment was poor, waiting for the cycle to turn and letting mean reversion do the rest.

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