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RUT
Market Watch
123 days

Are small-cap stocks cheaper than large caps? Yes — if you ignore this one key fact. - MarketWatch

1. Over 40% of Russell 2000 companies are unprofitable, raising P/E ratios. 2. RUT trades at a premium, but overall small caps aren't undervalued. 3. Differing P/E calculations between sources highlight valuation discrepancies. 4. Focus on small caps with low P/E ratios to find value. 5. Some attractive individual stocks exist despite the sector's challenges.

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FAQ

Why Bearish?

The high P/E ratios for RUT suggest overvaluation. Historical trends show that elevated P/Es often lead to corrections.

How important is it?

The pervasive issue of unprofitability in RUT impacts investor sentiment significantly. The marked differences in P/E ratios influence short-term trading strategies.

Why Short Term?

Immediate market reactions to high P/E valuations can increase volatility, similar to past performance post-earnings reports.

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