1. Lewis claims small companies can outperform big ones in economic turmoil. 2. Small caps are more domestically focused, offering tariff insulation. 3. The last decade has favored large growth companies, setting up potential reversal. 4. Small-value stocks are seen as overdue for a rebound in the current climate. 5. Active management struggles against index funds in large-cap investing.
The article highlights potential growth and turnaround for small-cap stocks, which could shift investment interest away from the S&P 500. Historical data shows that after prolonged periods of large-cap dominance, small-cap stocks often experience significant rebounds, as seen post-2000 tech bubble.
The emphasis on small-caps as a counterforce to big tech suggests a strategic pivot for investors. An indicated increasing interest can redirect funds that typically gravitate towards the S&P 500, thus, influencing its price dynamics.
Interest in small-caps may increase as their fundamentals improve, but significant shifts in investment will take time. A potential market correction or economic shift could trigger the anticipated rotation towards small-cap stocks in the ensuing years.