from a logical point of view, mid-caps should perform better in the long run. Ain't much potential for Apple or Nvidia to triple from this point.
The question would be, how much of the megacorp outperformance is due to flaws in antitrust? A lot of their growth comes from either buying out the competition, or shooting the competition in their tracks.
My point would be: more vigorous antitrust regulation should be beneficial to mid-caps. As in Europe.
I'd buy European mid-caps... if Europe was a high growth region.
(Or as my Dad's generation used to say, if we had some ham, we could make some ham and eggs, if we had some eggs.)
The other thing I just realized about the indexed ETF problem is: ETFs keep a LOT of short-term Treasuries for cash management needs. This demand could be distorting the Treasury market. We've been in an inverted yield curve for 2-3 years, right? Also, if there is a crash in ETF contents, they may need a lot more Treasuries or a lot less.
as an global smid-cap investor, it's just easier to invest when something makes sense even as the economics contradict sentiment.
1. invest in smid-caps across dozens of developed nations. (macro-geo-currency diversify as these will depend more on local economies rather than intnl trade).
2. utilize stats to hold several hundred companies among many possible thousands (w/ simplistic industry diversification rails).
3. pay low fees for a VALUE fund manager to trade systematically using evidence. (never need hassle with foreign brokers and listings)
this in fact makes so much sense to me, that i dont mind paying taxes to get out of american large caps. guessing how long flows\sentiment continue is not possible.
if need be, invest directly in one of these smids to scratch some fundamental narrative itch.
Taken to a logical - if extreme - conclusion assuming the flow to index funds continues unabated, we are in danger of losing sight altogether of the original goal of capital markets: to connect capital looking for a return to businesses needing capital to make a return. The index-driven shift to large and larger starves SMID caps of capital, in the listed markets at least....
from a logical point of view, mid-caps should perform better in the long run. Ain't much potential for Apple or Nvidia to triple from this point.
The question would be, how much of the megacorp outperformance is due to flaws in antitrust? A lot of their growth comes from either buying out the competition, or shooting the competition in their tracks.
My point would be: more vigorous antitrust regulation should be beneficial to mid-caps. As in Europe.
I'd buy European mid-caps... if Europe was a high growth region.
(Or as my Dad's generation used to say, if we had some ham, we could make some ham and eggs, if we had some eggs.)
The other thing I just realized about the indexed ETF problem is: ETFs keep a LOT of short-term Treasuries for cash management needs. This demand could be distorting the Treasury market. We've been in an inverted yield curve for 2-3 years, right? Also, if there is a crash in ETF contents, they may need a lot more Treasuries or a lot less.
as an global smid-cap investor, it's just easier to invest when something makes sense even as the economics contradict sentiment.
1. invest in smid-caps across dozens of developed nations. (macro-geo-currency diversify as these will depend more on local economies rather than intnl trade).
2. utilize stats to hold several hundred companies among many possible thousands (w/ simplistic industry diversification rails).
3. pay low fees for a VALUE fund manager to trade systematically using evidence. (never need hassle with foreign brokers and listings)
this in fact makes so much sense to me, that i dont mind paying taxes to get out of american large caps. guessing how long flows\sentiment continue is not possible.
if need be, invest directly in one of these smids to scratch some fundamental narrative itch.
Taken to a logical - if extreme - conclusion assuming the flow to index funds continues unabated, we are in danger of losing sight altogether of the original goal of capital markets: to connect capital looking for a return to businesses needing capital to make a return. The index-driven shift to large and larger starves SMID caps of capital, in the listed markets at least....
Unfortunately, I think you are right.