Why investors will 'regret' not owning small caps in 2025
Essex Investment Management co-CEO and senior portfolio manager Nancy Prial joins Market Domination Overtime to discuss why investors should consider adding small caps (^RUT) to their portfolios despite current market pressure on this sector. "We know it's been a very tough slog. Clearly, small caps are out of favor," she tells Yahoo Finance. However, she believes investors will "regret" not owning them in 2025. Prial cites "a combination" of valuation and earnings growth: "Those two conditions are what will turn this somewhat historic underperformance cycle around." Regarding interest rate cuts, Prial emphasizes that small caps need "rate stabilization" rather than rate cuts to outperform. "If the 10-year is going to continue to go up ... that's going to be a headwind not only to small caps, [but] to the market overall," she explains. She adds that if rates stay in the 4 to 4.5% range, "that's an environment where small caps have prospered in the past." To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. This post was written by Angel Smith
