The Small-Cap Bull Market Has Legs

The Small-Cap Bull Market Has Legs
By User:klip game (Own work) [Public domain], via Wikimedia Commons

Chuck Royce discusses the small-cap market today and why he believes the transition from growth to value will continue.

Watch the video here.

Small-Cap Bull Market

Francis Gannon: We’ve had a really interesting year in the market so far. We completed a bear market in February, and we have gone on to what we’ve called a stealth bull market, really since the low in February of this year, with the market up some 30%. What are your thoughts on the market, the small-cap market today?

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Chuck Royce: This is a really important point. We did have a major correction from June of last year through February, a big correction, 25% plus. This is one of the top ten corrections over the last 25-30 years.


I don’t recall a single commentary in the major press about small-caps doing that poorly for that period of time. It certainly affected us. It affected our 2015 performance.

But there was a shift starting in the mid-year to from growth, which has been straight up for six years, to less emphasis on that. Biotechs had a bubble.

And certainly this year with a very strong emphasis in the first quarter the leadership has shifted to value. And this is the most important thing. So in addition to having probably a much longer run ahead of us, 30% is probably not going to be the extent of this bull market in small-caps. I think it will be closer to 80-10