Royce Funds' Gannon Says Now Is Time to Buy Small Caps

The video discusses the economic outlook and its impact on small cap stocks, focusing on the Russell 2000's historical performance and future prospects. It highlights challenges such as debt and valuation in small cap companies, and the role of volatility in creating market opportunities. The discussion also covers sector analysis and the importance of pricing power in navigating economic challenges.

What historical trend is observed in the Russell 2000 index following a negative year?

• No change in performance

• A minor increase in returns

• Significant returns averaging over 21%

• A consistent decline in the following year

What is a major concern for small cap companies as discussed in the second section?

• Excessive cash reserves

• Lack of market presence

• High levels of innovation

• Debt issues, particularly floating rate debt

What percentage of the Russell 2000 are considered 'zombie companies'?

• 20%

• 40%

• 10%

• 30%

How is increased volatility in the small cap market viewed according to the third section?

• As a negative trend for long-term investors

• As irrelevant to market performance

• As a positive opportunity for long-term investors

• As a sign of market stability

What sector characteristics are highlighted as having potential opportunities in the small cap market?

• Companies with high debt levels

• Stable and non-cyclical companies

• Companies with low pricing power

• Economically sensitive or cyclical companies