small-caps (1)

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Small Caps Ripe For The Picking?

Originally posted @ http://www.ritholtz.com/blog/wp-content/uploads/2011/08/Bank-Gx62.pdf

Beaten-down small-cap stocks could be ready to rally, some say

among professional investors.

“If we’re not in an economic recession,

we could see a decent rally in small-cap

stocks,” said Steven DeSanctis, small-cap

strategist at Bank of America Merrill

Lynch inNew York.

Small-cap stocks have lost so much

value this year — about 25 percent since

their late-April peak, as measured by the

small-cap Russell 2000 index — that De-

Sanctis thinks “flat is the new up”: If they

simply end the year where they started,

investors will see about a 13 percent rally

from where they are now. Large-cap

stocks slid about 18 percent in the same

period.

Bank of America sees a 40 percent

chance of recession, he added.

“That’s really the question that people

have to answer for themselves — ‘Do we

think a recession will occur?’ ” said Matthew

Litfin, a portfolio manager at William

Blair who invests in small- and midsiz

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