One asset class that has outperformed the broad market for nearly a decade is small cap. Since the low in April 1999, the Russell 2000 Index -- which has an equivalent exchange-traded fund, or ETF (AMEX: IWM) -- has gained 80 percentage points more than the S&P 500 index.

Over the past few months, however, this group has begun to languish. Recently, the small cap benchmark broke below key short- and long-term support levels relative to the S&P 500, suggesting that, in comparative terms at least, the good times for small company shares may be over.

Interestingly, this turnabout comes at a time when the stock market has been frothy, but has not seen widespread participation by small investors. I wonder if the two developments are somehow related?

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle: An Insider's Guide to Successful Investing in a Changing World.

End of the road for small cap? originally appeared on BloggingStocks on Thu, 26 Jul 2007 15:55:00 EST. Please see our terms for use of feeds.

One of the fun parts of investing, whether professionally or as a private investor, is finding that special small-capitalization name and running with it. Typically, a company with a market value, or market capitalization of $1 billion or under, is considered small capitalization. Some investors place that number at $3 billion or under, but the professional investing world uses $1 billion as the measuring stick.

Many companies that trade at $1 billion or under market cap are newer, less established companies that try to make their mark in their respective sectors. With the 10-year U.S. Treasury note sporting a current yield of 5.16%, it's a tough environment for these stocks to garner attention, or serious buying. Small cap names need a friendly interest rate scene to capture serious investors interest. The "safe yields" of the 10 year note over 5% negates the attractive growth rates that small cap stocks can provide.

Small cap names tend to carry a lot more risk as they are less consistent when it comes to earnings. With "easy money" earnings north of 5%, these stocks are difficult to move up to higher valuations. Many a portfolio manager will tell you it is a great time to accumulate these types of stocks as sellers are sometimes sloppy in their selling style, thus allowing for bargain pricing for the buyers.

Small cap stocks can be the best performing sector of the market in a lower interest rate environment, but investors will scramble for larger cap, paying dividends names in high interest rate times. Consistent dividends means consistent earnings.

As we enter this second quarter earnings season, identify your small cap favorites and nibble away at bargain prices. Here are some my small cap growth ideas: Top 25 stocks for the NEXT 25 Years. Eventually, the stock market rewards earnings growth with higher valuations. Always has. Always will...

Georges Yared is the Chief Investment Strategist for Yared Investment Research.

Small-cap growth tough in current interest rate climate originally appeared on BloggingStocks on Tue, 10 Jul 2007 08:40:00 EST. Please see our terms for use of feeds.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

LJ International, Inc. (NASDAQ: JADE) is the favorite speculative play from Ian Wyatt, editor of Rising Star Stocks. The small cap advisor explains, "JADE is a fast growing, vertically integrated jewelry company that employs a 'mine to market' business strategy.

"LJ International is a pure play in the superlative growth of China's domestic jewelry sector estimated at over $20 billion and growing at 18% to 20% per year. Its has also established a presence as a growing wholesaler in the massive $45 billion U.S. jewelry market.

"Equally exciting has been the company's successful venture into the retail jewelry business vis-à-vis its ENZO retail chain in China, which currently comprises 35 stores and is expected to grow to 100 stores just in time for the start of the Beijing Olympics in June of 2008.

Continue reading Top Picks 2007: Ian Wyatt thinks JADE is a jewel

Top Picks 2007: Ian Wyatt thinks JADE is a jewel originally appeared on BloggingStocks on Sun, 31 Dec 2006 14:30:00 EST. Please see our terms for use of feeds.