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Speaker 1: Welcome to Ask Fear and Greed, where we take your

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Speaker 1: questions and do our best to answer them. I'm Michael

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Speaker 1: Thompson and hello, Sean Aylmer.

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Speaker 2: Hello, Michael.

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Speaker 1: Got a good one for you today. Jean Yes has

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Speaker 1: come from Erica on Instagram and you can go to

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Speaker 1: LinkedIn or Instagram or Facebook or fearangreed dot com dot

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Speaker 1: are You would send your question in if you want

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Speaker 1: to do what Erica has done. She says, with all

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Speaker 1: the turmoil in markets, and it was a longer email,

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Speaker 1: but this is really kind of the number. Yeah, with

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Speaker 1: all the turmoil in markets, how are smaller companies performing

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Speaker 1: compared to bigger companies?

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Speaker 2: Yeah, so I got a heads up on this one,

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Speaker 2: and it's it's really interesting because I wondered, I mean,

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Speaker 2: when she Erica rated, I thought, that's a cracking question.

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Speaker 2: Because the top two hundred has been down two point

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Speaker 2: four percent so far this year, the A six two hundred,

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Speaker 2: the financials index, which is mostly the four banks, down

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Speaker 2: four point four percent, Tech stocks down four point five percent.

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Speaker 2: What about the small ordinaries, the small cap index, well,

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Speaker 2: it's down less than one percent. Apart from gold stocks,

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Speaker 2: the small caps have been among the best performers this year.

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Speaker 1: So for definition here, what are we referring to as

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Speaker 1: as a small cap and within the small ordinaries?

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Speaker 2: So the small ordinaries is basically between one hundred and one,

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Speaker 2: stock number one hundred and one and stock number three hundred. Ok.

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Speaker 2: After three hundred they become microcaps yep, fifty one to

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Speaker 2: one hundred, mid caps one come off bank through to

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Speaker 2: fifty large caps. So they're the definitions great. I was

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Speaker 2: actually quite surprised that the small caps one hundred to

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Speaker 2: three hundred have outperformed. Why is this the case, Well,

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Speaker 2: many of those small camps are cyclical STOCKSK what that means?

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Speaker 2: They do better when interest rates are likely to or

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Speaker 2: are falling, And of course that's exactly what's happened. There's

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Speaker 2: a bunch of like small retailers. So I don't have

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Speaker 2: the thing, but you know, I'm thinking Dusk and Leavisa

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Speaker 2: and Coogan dot Com and a bunch of those sort

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Speaker 2: of companies in that they're just going to do better

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Speaker 2: when people think a bit more money to spend. I'm

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Speaker 2: not paying as much on my homeland, I might go

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Speaker 2: off and do that resources that lots of mining companies

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Speaker 2: in this too. Now they're less well. It depends on

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Speaker 2: what sector they're in, but they can be less cyclical,

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Speaker 2: but they very much depend on commodity prices, so like

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Speaker 2: retailers and miners are a big part of that small.

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Speaker 1: Okay, so these are still those companies then that are

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Speaker 1: exposed to global forces like these are still exporters and

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Speaker 1: things within within this, some are, some aren't. Where they're

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Speaker 1: actually benefiting at the moment, apart from lower interest rates,

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Speaker 1: is that everyone has disliked them for about three years.

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Speaker 2: I think every year for the last three years we

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Speaker 2: have had someone come on and say, this is a

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Speaker 2: year that small caps are going to do well, and

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Speaker 2: so for twenty twenty two, twenty three, twenty four always

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Speaker 2: going to be the time that small caps are going

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Speaker 2: to do well. And now they chepishly. I mean, those commentators,

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Speaker 2: they all agree, it's just remarkable how poorly they've done

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Speaker 2: as a result, though their valuations are much much lower.

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Speaker 2: So they talk about premiums of large caps to small caps.

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Speaker 2: So it's kind of how large cups are valued relative

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Speaker 2: to small caps and that premium. The difference is huge

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Speaker 2: at the moment and has been for a number of years.

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Speaker 2: So one thing that small caps have got going is

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Speaker 2: that relative to the rest of the market, they're cheap,

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Speaker 2: and so when you have a cycle turning set of

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Speaker 2: interest rates coming down, and you have people wanting to

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Speaker 2: invest and find opportunities, and actually at this small cap

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Speaker 2: they're a lot cheaper than buying Commonwealth Bank, for example,

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Speaker 2: So they've actually outperformed this year.

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Speaker 1: A lot of them are still household names. There are

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Speaker 1: a lot of companies here that we all know. Yeah,

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Speaker 1: these are not the microcaps that are very, very obscure

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Speaker 1: that you might never have actually heard of. These are

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Speaker 1: companies that really you've been talking about some of these retailers.

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Speaker 1: They are companies as you walk into your local Westfield

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Speaker 1: and you're going to see them in there. They're the miners.

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Speaker 1: Some of these miners that you are hearing about on

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Speaker 1: the news are hearing about on probably more likely on

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Speaker 1: fear and great to be honest, but these are companies

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Speaker 1: that we all know, So it's not like they are

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Speaker 1: entirely foreign to us.

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Speaker 2: I mean, you know, Goodsemany, Gomez Amp flight Center. There's

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Speaker 2: just a stack of them that we kind of talk

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Speaker 2: about all the time. That part of me domain a

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Speaker 2: great friend of ours, there in that like it's an

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Speaker 2: enemnute stack of mining companies as well. Yeah, so they

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Speaker 2: are kind of I don't know the household names, but

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Speaker 2: they're not far off it.

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Speaker 1: Yeah, Good Many Gomez is a household name in our

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Speaker 1: in our house.

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Speaker 2: Don't my kids like Goodminess much?

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Speaker 1: I don't know, you know, I think it's just the variety.

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Speaker 1: I think it's the fact that there is now this

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Speaker 1: other option out there that it's not just kind of

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Speaker 1: takeaway burgers stuff. It is to be able to get

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Speaker 1: a good burrito wherever you are and rather than just

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Speaker 1: having to go to Antijito's in Newcastle, right, which is

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Speaker 1: the greatest burrito in Australia. Wherever you are listening, plan

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Speaker 1: a trip to Newcastle, go into Antajito's and get their

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Speaker 1: pork burrito.

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Speaker 2: Is that right? It's exquisite. Now on the again brings

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Speaker 2: back thing, you know, one of the great small caps

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Speaker 2: of the last two months, which is now just entered

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Speaker 2: the top fifty stocks. In fact, it's now the twenty

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Speaker 2: second largest company, whereas twelve months ago it was a

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Speaker 2: small cap what is it, Promedicus really? Yeah, so it

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Speaker 2: has done It's up about one hundred and fifty percent

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Speaker 2: over the last months, and it has gone from small

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Speaker 2: cap to top twenty five company.

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Speaker 1: It's like a tennis player going from kind of like

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Speaker 1: it's two hundredth in the world. Yes, just suddenly shooting

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Speaker 1: up into like the top tier. That's amazing.

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Speaker 2: I know you don't like golf, well, I know where

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Speaker 2: you like golf or not, but I'm sort of a

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Speaker 2: bit addicted to the PGA Tour. And there was a

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Speaker 2: fella from Australia. Villops is his name. V I l

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Speaker 2: I p S twenty three year old from Perth who

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Speaker 2: moved to Florida when he was in high school because

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Speaker 2: his parents wanted him to do well at golf. He

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Speaker 2: this week won a PGA tournament. It's on his third

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Speaker 2: time he's played in the PGA tournament. And when we're

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Speaker 2: PJ we're talking Tiger Woods here, we're talking the absolute best.

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Speaker 2: And he won. And the reason I'm telling this story

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Speaker 2: is like Promedicus. You know, this guy has come from

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Speaker 2: nowhere to actually win a PGA tournament.

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Speaker 1: And suddenly he shoots up the rankings.

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Speaker 2: Yeah, his name is.

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Speaker 1: And the prize money it's just a different point.

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Speaker 2: Won two million dollars.

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Speaker 1: Us US on him. Oh amazing, goodness me. We veered

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Speaker 1: off course.

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Speaker 2: There, we did. I think we answer the question that.

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Speaker 1: We absolutely did. We absolutely did so, Erica, I do

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Speaker 1: hope you're satisfied with that that we've answered it with

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Speaker 1: enough detail and giving you some bonus facts about golf

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Speaker 1: and where to find the best burrito in Australia Antitos. Yes, indeed,

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Speaker 1: all right. Thank you Erica for the question, Thank you

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Speaker 1: Sean for answering it.

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Speaker 2: Thank you Michael.

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Speaker 1: Remember, if you've got something that you would like to know,

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Speaker 1: then please send through your question on LinkedIn, on Instagram,

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Speaker 1: Facebook or Fearandgreed dot com dot au and we will

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Speaker 1: pop it on the list and get to it as

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Speaker 1: soon as it is humanly possible. I'm Michael Thompson and

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Speaker 1: this is ask Fear and Greed