Bank of America Cautious on Small Caps

The video discusses the current state of small cap stocks, highlighting their attractive valuations compared to large caps, despite being in an earnings recession. It explores the impact of trade wars and geopolitical risks, which have negatively affected small caps due to their role as suppliers to multinationals. The narrowing gap between domestic and international exposure is also examined. The video concludes with a focus on profitability trends, noting that many small caps lack earnings, emphasizing the importance of selecting stocks with strong balance sheets.

What is the current valuation status of small caps compared to large caps?

• At 17-year highs

• At 17-year lows

• Equal to large caps

• Higher than large caps

Which geopolitical event is mentioned as a risk for small caps?

• The G7 Summit

• The Paris Climate Agreement

• Brexit

• The US presidential election

Why might small caps not be insulated from the trade war?

• They are primarily exporters

• They are not affected by tariffs

• They are suppliers to multinationals

• They have no foreign exposure

What has been a recent focus in the market that affects small caps?

• Mergers and Acquisitions

• Expansion

• Profitability

• Innovation

What percentage of the small cap index currently has no earnings?

• 30%

• 40%

• 20%

• 10%