In the latest episode of “The Long View,” JB Taylor, CEO of Wasatch Global Investors, delves into the reasons behind the underperformance of small caps, the opportunities found outside the US, and the impact of technology on every company.
Taylor highlights the prolonged outperformance of large-cap stocks, particularly the “Magnificent Seven” tech giants, which have dominated the market in recent years. However, he points out that historically, there have been cycles of large caps outperforming small caps, and currently, small caps are trading at a significant discount compared to large caps.
When it comes to global opportunities, Taylor emphasizes the success they have had in India, where they have found companies with impressive growth rates, good margins, and efficient capital utilization. On the other hand, he notes the challenges in the Chinese market, where companies often prioritize growth over sustainable returns on capital.
Regarding the role of technology in businesses, Taylor asserts that every company is now a technology company, as advancements in software have made it essential for gaining a competitive edge. He gives the example of Copart, a company in the salvage vehicle industry that revolutionized its business by implementing online auctions, showcasing how technology can transform even non-tech businesses.
DailyBubble’s perspective on these topics is that investors should consider the long-term potential of small-cap stocks, explore opportunities in emerging markets like India, and recognize the transformative power of technology in driving business success. By staying informed and adaptable to changing market dynamics, investors can position themselves for growth and success in the evolving investment landscape.