Small may be beautiful

Article Abstract:

Shares in smaller firms in the US have performed well in early 1997, though they did not perform as well as shares in larger firms in 1996. Smaller companies' shares appear cheap, but there are risks involved in investing in these shares. If the bull run ends, investors are likely to move away from smaller companies and stick to the relative security of larger firms. Steady growth and subdued inflation would help smaller firms, but too high growth would push up inflation and interest rates and make capital more expensive. Sluggish growthwould also help larger firms rather than small firms.

Small Business

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US: bear's delight

Article Abstract:

Nomura's Nick Knight sees lower share prices likely to result form a rise in US interest rates triggered by increased inflation and economic growth above trend levels. Inflation tends to rise rapidly when it starts to rise though there is little sign of inflation in Oct 1996. Accelerating labor costs could push up inflation. The Federal reserve appear not to be acting to pre-empt inflation and is likely to raise rates only when inflation rises. Lack of action has meant that a share price drop is more likely.

Inflation (Finance), Inflation (Economics)

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Bush whacked

Article Abstract:

Smaller stocks tend to perform less well in the US when there is a Republican government. This is true for stocks as a whole, but especially so for smaller stocks.

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