This Motley Fool article just proves my point:
"Look, I'm a firm believer that large caps should be at the foundation of every equity portfolio. But if you're like me -- you have a long-term time horizon (15-plus years), and capital appreciation is your primary investment objective -- you need small-cap stocks. There are no two ways about it.
What's more, small caps tend to outperform large caps by a wide margin after a market bottom. In a down market like this, it pays to give small caps more attention. Once the market recovers, you'll be glad you did."For starters, unless you've made a concentrated effort to gain small-cap exposure in your portfolio, you may well be under allocated in this asset class. And that's a mistake: Small-cap stocks give investors the best chance at outperforming the market over the long haul. NYU professor Aswath Damodaran found that from 1927 to 2001, the smallest companies outperformed the largest ones with a 20% annual return versus 12% on a value-weighted basis. Many of the most successful small caps were:
- Underfollowed on Wall Street.
- Led by dedicated founders.
- Financially strong.
- Dominant in their market niche.
These were traits shared by the likes of Dell (Nasdaq: DELL) and Southwest Airlines (NYSE: LUV) early on, and they turned out to be some of the best stocks of our generation. Fifteen years from now, it's very possible that we'll look back at some of today's small caps and wonder how we missed those massive opportunities."To read the full article go here:"Buy a small cap Stock"