Scott Wren from AG Edwards just made a case for large cap but admitted they have been wrong so far about the timing of the large cap move.
The case is compelling and has been for the last couple of years. Compelling does not equal right. A lot of the strategists favor the large caps, which might be part of the problem. An ongoing discussion for the last day or two has been about parts of the market rotating back into favor eventually. Major rotations tend to happen when people don't expect. It seems like a lot of folks expect large cap to do well, which is maybe why it won't.
At some point the gang may give up on this part of the market and that might be a better time to go a little heavier here. For now I think Johnson & Johnson might be the only domestic mega cap I own for clients, at least it is the only one that comes to mind right now. I do have foreign exposure above $100 billion with British Pete and Novarits to name two.
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6 comments:
This has been a real good case to watch. GOTTA be in large caps NOW has been the mantra for over two years. I NEVER heard any of these people touting small cap value in 2000. Or international or EM.....microcaps....then...they were all into TECH.
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Didn't Buffet say something like: "If history revealed the path to riches, librarians would have all the money."
Big caps are stopped clock, they will be correct some time, all you have to do is wait.
OG
Foreign big cap can do ok. It's just US big cap for some reason, with some exceptions.
I've heard people say that the bigger cap a company is, the more likely it is to be followed closely, and thus the more likely the stock price will reflect the fair value of the company. So it's not going to move much one way or another. Sounds plausible. Also explains why small/mid cap does better. And foreign too. Not as many people following them.
Beware of British Pete. A story in today's Anchorage Daily News (adn.com) shows they have done a terrible job of maintenance on the Alaska pipeline. Mitchelg
I've had BP for clients since 2003. BP like all the integrated oils have issues like what Mitchelg refers to, all of them.
BP may or may not be a good stock for you but markets are very unlikely to react to this type of news.
Small caps are the root of American entrepreneurship. I believe some large caps like JNJ, BA and even MO will do well, but overall, owning large caps is a defensive strategy. I still prefer the small caps.
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