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Small vs. Large Caps—Where to Invest: Market Pros

Monday, 8 Mar 2010 | 3:47 PM ET

Small caps have been outperforming the large caps steadily over the past few months. So will the trend continue? Michael Cuggino, president and portfolio manager at Permanent Portfolio Funds, and Eric Marshall, director of research at Hodges Capital Management, shared their insights.

Large Caps vs. Small Caps
Small caps have been outperforming their large caps pretty steadily over the last few months. Eric Marshall, of Hodges Capital Management, and Mike Cuggino, of Permanent Portfolio Funds, debate whether it's time for a switch.

“We think now is a good time for investors to be looking at small cap companies which typically outperform in the early stages of a new market cycle,” Marshall told CNBC.

“It’s also easier to find growth in small caps relative to large caps in a more moderate macro environment.”

Marshall said he also expects M&A activities to continue, which should benefit the small-cap companies.

In the meantime, Cuggino expects that economic growth will continue in the long-term, which should be advantageous for the large-cap firms.

“Bigger companies have greater resources, more diverse product lines, ability to tap markets further away from home than smaller companies do,” he said.

“And therefore, in this economy, larger caps should do well and grow in this environment as well as small cap stocks.”

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Top Dow Gainers (As of mid-afternoon):

Cisco

McDonald's

Verizon

AT&T

DuPont

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Disclosures:

No immediate information was available for Cuggino or his firm.

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Disclaimer

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