Small caps outperform after recessions, so 'you have history on your side,' money manager says $IWM (via TradingNation)
And the group's exposure to the health-care space isn't its only potential catalyst in this market, Michael Binger, president of money management firm Gradient Investments, told CNBC's"When you look historically, as the economy comes out of a recession — and we're certainly going to be in a recession after the second quarter — small caps have outperformed large caps in nine out of the last 10 economic downturns coming out of those downturns," Binger said.
Small caps also tend to be more U.S.-centric than their larger counterparts, said Binger, who plays the group via theFor comparison, the Russell 2000 index, tracked by the"You don't have to worry about rising tensions in China, where the dollar's going to go," Binger said. "And, frankly, they're just a lot cheaper than their large-cap brethren.
"I made a quick ratio chart looking at the KRE divided by the S&P 500, and there is some small evidence you're trying to make a double bottom down there, but at this point in time, I don't think there's enough evidence," he said, pointing to the bottom panel of his chart. "Small- and mid-cap stocks have underperformed for a while. Nice little catch-up this week, but you need more evidence, more time, to make a bigger, broader call for investors at this point," he said Friday.
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