Seizing Opportunities When The Equity Market Pulls Back

Seizing Opportunities When The Equity Market Pulls Back

Seizing Opportunities When The Equity Market Pulls Back by Chip Skinner, The Royce Funds

The small-cap growth area of the equity market has been a great place for investors the last 5 or 6 years.

As we know, there will continue to be great innovation, there will continue to be fantastic growth companies out there but I also believe in reversion to the mean and, therefore, I would not be surprised to see maybe small-cap value actually do better in the next 5-6 years.

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investor 1652197064It's no secret that this year has been a volatile one for the markets. The S&P 500 is down 18% year to date, while the Nasdaq Composite is off by 27% year to date. Meanwhile, the VIX, a key measure of volatility, is up 49% year to date at 24.72. However, it has spiked as Read More

I believe it is impossible to predict the equity market. Your guess is as good as mine. We continue to find interesting opportunities and when we have seen a pullback like we have, about 15% drop from the peak, this summer, that creates better opportunities for us. We can actually start looking at some of those great growth stocks that may have been too expensive before.

It is a good thing I think to have periodic pullbacks in the market. Sometimes things can get a little frothy when returns are high. Sometimes you will expect to see a pullback when perhaps the Federal Reserve is a little bit sort of mixed in terms of their message, which I think we have seen lately.

We have also seen the growth engine globally. China has had a deceleration and I think that has affected a lot of companies, part