Monday, June 30, 2008

Why to invest in micro/small caps

Rolf Banz made a famous study back in the early 1980s, called “The Relationship Between Return and Market Value of Common Stocks.” In this report Banz found that over the 50-plus years he studied, the smaller the company, the larger the average return. This held true for all the years he studied, regardless of whether the market ended the year up or down. If you had invested in the smallest companies over that period, you would have made nearly five times what you would have had you invested in the blue chips.
Dan Ross

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