Why Investors Shouldn't Worry About the Selloff in Small Caps

The video features a discussion on market trends, focusing on the recent sell-off in small cap stocks and the outperformance of large caps. It analyzes the growth vs. value debate, highlighting the impact of the yield curve and interest rates. The discussion also covers late cycle conditions and recommends a momentum investment strategy using the iShares Momentum ETF, emphasizing its potential for future growth.

What is the main concern regarding small-cap stocks as discussed in the first section?

• They have consistently outperformed large-cap stocks.

• They have reached an all-time high recently.

• They are not included in the S&P 500 index.

• They are experiencing a significant sell-off compared to large-cap stocks.

According to the analysis, what historical trend is associated with large-cap outperformance?

• A secular rise in the market from the 1980s to the 1990s.

• A decrease in small-cap stock prices.

• A decline in the overall market.

• An increase in trade tensions.

What has been the impact of the flattening yield curve on growth and value stocks?

• The yield curve has steepened significantly.

• Both growth and value stocks have declined.

• Growth stocks have outperformed value stocks.

• Value stocks have outperformed growth stocks.

What is a key characteristic of the iShares Momentum ETF?

• It focuses solely on technology stocks.

• It is rebalanced twice a year based on risk-adjusted returns.

• It only includes financial stocks.

• It avoids stocks with high volatility.

Why is momentum investing considered favorable in late-cycle conditions?

• It has historically done well, especially late in the cycle.

• It avoids market leaders.

• It typically underperforms in such conditions.

• It focuses on short-term gains.