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I agree that a good diversified portfolio should hold a weighting to small caps. Currently, the small/mid cap sleeve of my portfolio represents about eighteen percent of the growth area of my portfolio. I have my target allocation to them set at twenty percent. So with this, I do plan to raise my allocation sometime between now and late fall by about two percent.
In viewing the WSJ's listing on P/E's Ratios & Yields I am finding that the Russell 2000 is selling at TTM ratio of 73.30 and on forward estimates at 18.21 while the S&P 500 Index is selling at a TTM ratio of 18.04 and on forward estimates at 15.8. Notice the large difference between the trailing twelve month (TTM) numbers. And, according to the article the Russell 2000 had a greater percentage of its companies recently miss their earnings numbers. With this, I am surprised that there has only been about a ten percent pull back thus far. I look for more downside to come as we move into and through summer as forward estimate numbers get revised (downward). Should this happen then the P/E Ratio will most likely rise. Perhaps, by the time fall arrives the stage will be set for us to have a good fall rally in small caps. Anyway, my current thinking is that small caps remain in overbought territory as I write based on their TTM numbers and in my belief that foward earnings estimates will be revised downwards as we approach second quarter reporting.
The above is Old_Skeet's Scientific Wild Ass Guess ... and, no one really knows what is going to take place until the event day arrives. I do know that summer is coming and it is time for a break. At least I plan to take one and perhaps the markets will too.
I have linked below my reference to the P/E Ratios.
Either way it goes ... I'll be ok as I already have an ample representation to small/mid caps should they turn upward, I'll be at the party. Sould they continue to decline as I believe they will I have an ample supply of cash that I can do some buying and raise my small/mid cap allocation towards its target as I usually buy during a good pull back and/or correction.
Have a good weekend … and, I wish all “Good Investing.”
Comments
In viewing the WSJ's listing on P/E's Ratios & Yields I am finding that the Russell 2000 is selling at TTM ratio of 73.30 and on forward estimates at 18.21 while the S&P 500 Index is selling at a TTM ratio of 18.04 and on forward estimates at 15.8. Notice the large difference between the trailing twelve month (TTM) numbers. And, according to the article the Russell 2000 had a greater percentage of its companies recently miss their earnings numbers. With this, I am surprised that there has only been about a ten percent pull back thus far. I look for more downside to come as we move into and through summer as forward estimate numbers get revised (downward). Should this happen then the P/E Ratio will most likely rise. Perhaps, by the time fall arrives the stage will be set for us to have a good fall rally in small caps. Anyway, my current thinking is that small caps remain in overbought territory as I write based on their TTM numbers and in my belief that foward earnings estimates will be revised downwards as we approach second quarter reporting.
The above is Old_Skeet's Scientific Wild Ass Guess ... and, no one really knows what is going to take place until the event day arrives. I do know that summer is coming and it is time for a break. At least I plan to take one and perhaps the markets will too.
I have linked below my reference to the P/E Ratios.
http://online.wsj.com/mdc/public/page/2_3021-peyield.html?mod=wsj_mdc_additional_ustocks
In addition, read rule number six in the below link.
http://www.dryassociates.com/16_rules.htm
Either way it goes ... I'll be ok as I already have an ample representation to small/mid caps should they turn upward, I'll be at the party. Sould they continue to decline as I believe they will I have an ample supply of cash that I can do some buying and raise my small/mid cap allocation towards its target as I usually buy during a good pull back and/or correction.
Have a good weekend … and, I wish all “Good Investing.”
Old_Skeet