There's an academic paper from 2015 titled "'Size Matters, If you Control Your Junk", arguing that the small cap effect is real if you select quality small caps. The economist Hendrik Bessembinder published research showing that if you remove the 4% of stocks with the best performance (over their entire lifetime), on average the remaining 96% matched one-month T-bills in performance. Also, the difference between winners and losers gets bigger as you go down the market cap scale. That's just to share the conclusions of some academic research which I think is relevant. Nanalyze, thanks for the video.
You're most welcome. Excellent comment! We raised this humorously-titled paper in a previous piece looking at (if I recall correctly) ARK's willingness to dabble in small stocks. Indeed the paper points to the junk (we warn people about junk often and are usually right) dragging down small caps as an asset class. If you remove them, then you have much better performance. So, a simple rule like "don't invest unless there are revenues" goes a long way towards improving returns. Thank you very much for raising this. Joe P.
Your own investment approach, favouring size, resonates with me for several reasons. Investing in small enterprises, usually young startups, one obviously accepts higher risks as price worth paying for higher growth potential and gains so yes: longevity, div king and small cap after all those years of growth is bewildering
I must be unlucky. On 4-29-24 I bought a huge position in Leggett & Platt (LEG), which is a 53 year in a row dividend king. I paid $18.10 per share. On 5-1-24 the stock dropped to $12.10 after news they were severely cutting the dividend to almost nothing.
Healthcare seems like the most obvious play on aging I suppose. Please raise suggested topics on our Discord server if you would be so kind. That way many of our paying subscribers can comment on proposed topics as well. Thank you! Joe P.
I know I mentioned that before but I have to do it again sorry. You speak so quickly. My English is excellent and I speak fluently and I listen to several podcasts and RU-vid channels. I've never complained about the pace in any other podcast before. You move quickly from one point to another and I struggle in staying focus on one point.
Joe here. Please never hesitate to leave feedback like this. It's very useful. The pace at which I speak is tough to change without actively focusing on it. I prefer to just speak naturally as I do which makes the videos much more authentic. We probably said this before but can you try to listen to them at 0.75X speed? RU-vid has this option. I tried it and there is no distortion, but it is a bit slow paced. I will actively think about this. Our coming election video was already recorded so bear with me on that one. It's a 20 minute video and pretty fast paced. Sometimes I get out of hand and I'll work on that. Joe P.
@@Nanalyze I have wanted to say this: I like your expressive way to speak and on my behalf I find it very easy to understand. That was actually the first reason (and the humour) why I started to follow these videos, after came the facts. I am from Finland. Look at our stock exchange, sigh!
Not sure there's enough interest there to be honest. They're a conglomerate so would be tough to analyze. Best to raise new names on our Discord server ;) Joe P.
@@nech1 It's for paying subscribers only. YT has a subscription option and also we have monthly/annual plans covered here: www.nanalyze.com/subscription-plans/
That sounds like a really good idea for a video actually. We have a very packed queue but I added this as I've been meaning to really dig into this based on some research I read from MSCI. Joe P.
Good question. We didn't have enough time during this presentation to get into that level of detail. The credit agencies are an excellent source of information on whether debt ought to be a concern or not for any given firm.
We can see how that would be misleading, sorry for that. By "our" we're referring to our methodology which identified these stocks. :) We currently don't hold any small-cap dividend stocks, just large-cap ones.
