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].
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