I read an interesting article today in a local Sydney newspaper that argued it is now time to start moving out of spec/smal caps (esp. miners) and into larger industrials/blue chips.
He argued this has been a trend in recoveries and sited examples after dot.com bust and post Sep. 11 recession of 2001/2002. Although this recovery has been a long time coming he feels recent good news and index performance in the U.S. shows the U.S. is starting to really recover and this will also push much of the developed world along the recovery cycle.
Over the past 6 months my portfolio has moved dramatically to spec/small caps (mainly mining and commodities) now about 60% of my total and this proved a successful move as many of these have done very well (quite a few 2/3/4 baggers). Over that time many of my mid-cap/blue chips stood still (major banks being a good example), this has been frustrating as many of the large companies have performed quite well, have low PEs, good balance sheets etc.
Last week or so I have started to see some drag from the spec sector. Don't get me wrong if there are good drilling results of t/o rumors etc many still move up but others without news seems to be drifting down or stagnant. The writer mentioned SDL as an example.
I don't have much knowledge about previous recovery cycles after recessions and would like to get some opinions from posters who may have more knowledge or experience.
Is it time to start re-balancing portfolios away from spec/small caps and towards the larger companies/blue chips that will start performing from now? Is this a trend during the recovery cycle after recession we should pay attention to?
