Multi-Unit Franchisee Magazine Issue II, 2013 | Page 75

ments. The fact that stocks returned more than 16 percent last year on average—and provide potentially daily liquidity and a better-than-bonds average yield—is making the pundits take notice. • Cap values. Any big migration back into stocks would likely start with the largeand mega-cap stocks where liquidity and coverage are the best. When these investments become too expensive, it’s likely that same trend would trickle down to small-cap stocks. (Indeed, the two asset classes that performed best in the inflationary 1970s were real assets and small-cap stocks). Remember that change isn’t necessarily bad; it just means things will be different. • Global cap bias. Given more favorable fundamentals, sounder country-oforigin balance sheets, and the increasing liquidity of local markets, emerging and frontier market small-cap stocks may do better than U.S. small caps. • Real assets, real strength. Real assets (timber, energy, precious metals, and other commodities) have historically held their value well during inflationary times. After all, at the end of the day, there’s something real to hang on to. I suspect this time will be no different. So there you have it. I’m going out on a limb and declaring the old era nearly gone and a new one dawning. Remember that change isn’t necessarily bad; it just means things will be different. And for the nimble and open-minded, different can be fun! Carol M. Schleif, CFA, is regional chief investment officer at Abbot Downing, a Wells Fargo business that provides products and services through Wells Fargo Bank, N.A. and its affiliates and subsidiaries. She welcomes questions and comments at [email protected]. Multi-Unit Franchisee Issu e II , 2013  73