Small Cap Equities – Are They Right For You?
Small cap equities. Most people have heard about them and some have even ventured into them for investment purposes. The one thing many people might have noticed over the past couple of years is that small cap equities can be highly volatile whenever the economic conditions are questionable. (In reality, a lot of medium-cap equities became small-cap thanks to the devaluation of equities over the past two years or so). Evidently small capitalization stocks are a little more sensitive to uncertainty in the economy. But what made them a little more sensitive during the credit crisis was that the credit taps were essentially turned off. This made it difficult for a lot of companies to obtain new credit or renew existing facilities. In instances where credit was renewed, financial covenants became more restrictive, forcing the companies to evaluate whether to maintain access to capital or to let go of the credit facility altogether. In cases where they had no choice, future expansion progra
