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Small-Cap Investor Advice: Buy Large-Caps?

Is bigger always better? As you adjust your portfolio for next year, will big business be the best place put your cash or will small companies continue to perform well? On today’s “Closing Bell,” Maria Bartiromo took a closer look at that debate. Her guests were Steven Desanctis, director of small-cap research at Prudential Equity Group, and Walter Todd, principal at Greenwood Capital Associates.

Descantis said, "Since the bottom of the market in July, the Russell 2000 is way up. You’ve already seen good performance. But, you do want to move back toward the large-caps. I think you’ve been paid for the gains and all the good economic news and profit growth, and I think next year might be a tougher year for the small-caps."

Surprised to hear that one of the highest-ranking people with Prudential's Small-Cap Equity Group was recommending large-caps, Maria Bartiromo asked if there were any sectors in small-caps that he still liked.

Descantis replied, “We’ve stayed toward tech. They have a fair amount of business outside the U.S., and health care is the cheapest area. Also consumer services, retailers, and gaming and lodging.”

Walter Todd explained that valuation disparity between small-caps and large-caps combined with decelerating growth also would appear to favor large-caps next year.

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  • With almost 30 years experience in business television, Bill Griffeth is co-anchor of the 3 p.m. ET hour of CNBC's "Closing Bell."

  • Kelly Evans

    Kelly Evans is co-anchor of CNBC's "Closing Bell."