Small Cap Investing: Portfolio Allocation and Stock Picking Strategies

The Role of Small Caps in a Portfolio

• 🎯 Small caps are economically sensitive and have underperformed the S&P for a long time, though they have shown recent strength.
• 💡 While not a primary focus for some, owning small caps is seen as a commitment that shouldn't be a disproportionately large part of a portfolio.
• 📈 A traditional allocation might suggest 3% to 5% in small caps, potentially through an ETF like the IWM.

Approach to Small Cap Investing

• 🔑 For those investing over time, owning some small caps is absolutely recommended.
• 🧠 The preference is for stock picking within the small-cap space rather than a broad allocation.
• ⚠️ It's advised not to let the small-cap allocation become too disproportionate to the overall portfolio size.