{"id":2547,"date":"2025-10-08T16:35:43","date_gmt":"2025-10-08T16:35:43","guid":{"rendered":"https:\/\/igorsplayground.com\/appcheckr\/this-wall-street-strategist-thinks-small-caps-are-inferior-where-to-pick-your-spots\/"},"modified":"2025-10-08T16:35:43","modified_gmt":"2025-10-08T16:35:43","slug":"this-wall-street-strategist-thinks-small-caps-are-inferior-where-to-pick-your-spots","status":"publish","type":"post","link":"https:\/\/igorsplayground.com\/appcheckr\/this-wall-street-strategist-thinks-small-caps-are-inferior-where-to-pick-your-spots\/","title":{"rendered":"This Wall Street strategist thinks small caps are \u2018inferior.\u2019 Where to pick your spots"},"content":{"rendered":"<p><\/p>\n<div>\n<div data-test=\"articleBody-2\" data-analytics=\"RegularArticle-articleBody-5-2\">\n<p><span hidden=\"\" aria-hidden=\"true\" class=\"ArticleBody-extraData\"><span hidden=\"\" aria-hidden=\"true\" class=\"ArticleBody-extraData\"><span hidden=\"\" aria-hidden=\"true\" class=\"xyz-data\">Despite the recent surge in small-cap stocks, investors should temper their expectations for future performance, according to insights from Trivector Research. The Russell 2000 index has recently reached all-time highs, surpassing its previous record from November 2021. This week, it crossed the 2,500 mark for the first time and has seen an impressive gain of over 10% this year. However, Adam Parker, founder of Trivector, cautions that small caps may not sustain this momentum as we approach the fourth quarter, citing several inherent characteristics of this asset class. <\/p>\n<p>Parker describes small caps as a &#8220;structurally inferior asset class,&#8221; highlighting several factors that contribute to this view:<\/p>\n<ul>\n<li>They tend to be more value-oriented.<\/li>\n<li>They often include a higher proportion of lower-quality stocks.<\/li>\n<li>They are predominantly composed of capital goods and healthcare services companies, rather than sectors like media, entertainment, or semiconductors.<\/li>\n<li>They generally exhibit lower profitability.<\/li>\n<\/ul>\n<p>The recent rally in small caps can be attributed to the Federal Reserve&#8217;s decision to ease interest rates, coupled with an economy that has performed better than anticipated. Nevertheless, some strategists express a more optimistic outlook for small caps than they have in years, arguing that they present attractive opportunities, especially when compared to the high valuations seen in large-cap stocks.<\/p>\n<p>Parker acknowledges that while some small-cap stocks may continue to perform well, investors will need to be selective in their choices. &#8220;We believe that small cap outperformance is unlikely to continue through Q4,&#8221; he noted. &#8220;However, we recognize that the potential for identifying promising stock opportunities\u2014achieving alpha\u2014is greater in small-cap stocks than in the S&#038;P 500, due to the higher company-specific risks involved.&#8221;<\/p>\n<p>Among the small-cap growth stocks Parker identified as having potential are:<\/p>\n<ul>\n<li><strong>Onto Innovation:<\/strong> This semiconductor manufacturing software company was recently upgraded by Jefferies from hold to buy. Despite a drop of over 16% in 2025, the stock saw a 2.5% increase on Wednesday.<\/li>\n<li><strong>SentinelOne<\/strong> and <strong>JFrog:<\/strong> Both are also considered viable stock ideas.<\/li>\n<\/ul>\n<p>However, Parker advises caution when it comes to allocating funds to small caps. &#8220;We do not think investors should own more small caps than the S&#038;P 500 in absolute terms,&#8221; he stated. &#8220;And we would strongly advise against that.&#8221; <\/p>\n<p>(For more insights and strategies for 2026, join Josh Brown and others at CNBC PRO Live. Tickets and information are available here.)<\/span><\/span><\/span><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"\/><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Despite the recent surge in small-cap stocks, investors should temper their expectations for future performance, according to insights from Trivector Research. The Russell 2000 index has recently reached all-time highs, surpassing its previous record from November 2021. This week, it crossed the 2,500 mark for the first time and has seen an impressive gain of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2548,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[],"class_list":["post-2547","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts\/2547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/comments?post=2547"}],"version-history":[{"count":0,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts\/2547\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/media\/2548"}],"wp:attachment":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/media?parent=2547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/categories?post=2547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/tags?post=2547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}