Monday, May 15, 2006


Down again

Another lousy day: down 1.5 percent. My portfolio is now down 3.7 percent from its all time high. This is the largest drawdown that my portfolio has experienced in nearly two years. Obviously, I am not happy with the fact that I've lost more than $27,000 in less than two weeks. Nevertheless, I don't see any reason why I should alter my basic smallcap value based strategy. It's worked well in the past, and I suspect when the dust has settled, it will continue to work in the future.

It seems to me that at some point small cap stocks will underperform the market for a long stretch. The question is, how do you know when that starts?

Is last week just a short-term blip - or the beginning of a long trend? How long would small caps have to underperform before you would consider changing strategies?
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