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Slowly, then all at once.

I’m starting to see money flow back into smaller companies (sub $1B market cap) on our Canadian exchanges. Albeit slowly and not distributed but that may soon change. Insiders and smart buyers are nibbling. Even some substandard stocks (I won’t name names) are being short-squeezed here.

Who’s left to sell at this point?

So if you can allocate capital to outstanding small companies now you should be in a good position during the next bull run.

The often used benchmark for this space – BMO Canadian Small Cap Equity Fund – is currently down -3.99% YTD. Last year it was down -20.9%, which was its worst return in 10 years. But horrible years rarely follow miserable years.

Will the pendulum swing back up? History says yes.

Optimism is in the air:

– IPOs are slowly picking up
– Increased talk on Twitter about micro and small-caps
– Better than expected earnings results
– Seemingly unrelenting inflation is finally being tamed
– Investors hiding in large-cap defensive stocks are starting to come out of their shells
– Smaller innovative companies riding strong tailwinds and placing big bets on the future just can’t be ignored any longer

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