저자: GonçaloMalheiro · 외국인
요약 보기
Peter Lynch가 대형 기술주 대신 소형주 ETF를 선호한다고 소개. 2023년 대형 기술주 중심 상승장과 달리 나머지 시장은 부진했으나 소형주는 저평가 상태이며, 경기 성장·인플레 둔화기에 소형주가 유리하다고 주장. IWM(Russell 2000)과 VB(Vanguard Small Cap)를 비교했고 최근 1년 수익률은 VB가 약 6.7%, IWM이 약 5%로 소개됨. 영상은 투자 조언이 아니라 오락 목적이라고 명시.
다듬은 글
Do you want to invest in the stock market, but would you be able to say no to tech giants like Apple or Tesla? Well, that's precisely what one of the brightest minds in the investment world, Peter Lynch, tells us to do. Hello, my name is Gonçalo Malheiro, and I'm a certified financial educator, in addition to creating content for social media such as Instagram, YouTube, and TikTok.
Today, together with Rankia, I'm going to talk about why Peter Lynch advises against investing in large tech companies and where he thinks we should invest. To do this, we'll analyze two ETFs that, according to Peter Lynch, are two hidden gems in the stock market. So pay attention, because this strategy from Peter Lynch can completely change your investment portfolio.
Before we go to the video, I must mention that this content is solely for entertainment purposes and does not represent any type of financial advice, investment recommendation, or investment strategy recommendation. That said, let's start with the video and compare ETFs with tech stocks and why Peter Lynch likes the former so much.
So why does such a relevant investor as Peter Lynch tell us not to? Investing in large technology companies is a good idea, because Peter Lynch, known for his impressive results in the stock market, sees a slightly different outlook for the current market. While technology stocks are attractive and completely dominate global stock markets, they may not be the best option for long-term growth.
This is where the idea of investing in small-cap ETFs comes in. These ETFs focus on investing in smaller companies with less market capitalization than large technology companies. But why does this make them so special? Peter Lynch argues that these often undervalued companies, which don't attract as much attention from investors, can offer significant growth potential.
We have to consider that if we want to make money, we have to buy low and sell high. If we put our money into these large tech giants that are already at all-time highs, although they have some growth potential, that potential isn't very high. So let's see why we should invest in small-cap companies.
But before we get to that part of the video, I want to tell you that Rankia has a newsletter where you can access exclusive content that can considerably help in your learning process and in deepening your knowledge of the investment world. So, if you want to subscribe to Rankia's newsletter, just go to the description, where you'll find the link to subscribe and access this exclusive content.
So, why can investing in small market capitalization companies be a good investment opportunity? First, let's compare the bear market with small-cap companies. Peter Lynch points out that we have indeed been in a bear market for roughly the last two to three years, with the exception, as is natural, of large technology companies like Apple, Tesla, or NVIDIA.
While indices like the S&P 500 or Nasdaq, which were completely driven by these large companies, performed well, the rest of the market actually underperformed, with many stocks still trading below 2018 values. Then we also have the fact that 2023 showed better-than-expected economic growth in the United States.
Despite the possibility of recession, consumption remained stable, inflation decreased, and the labor market remained stable. This data is important because historically, small-cap stocks have managed to outperform large-cap stocks during periods of economic growth and decreasing inflation.
Another reason is that small-cap companies have advantages in terms of potential stock appreciation. If we look at the S&P 500, we see that its forward P/E ratio is below historical averages. Why? Because on one hand, we have large technology companies, the mega-companies, which have very high P/E ratios and are overvalued compared to their historical P/E ratios. On the other hand, we have small-cap companies with low P/E ratios that are undervalued compared to these large companies.
This means that these small-cap companies can represent good investment opportunities with quite significant appreciation potential. So let's look at the ETFs recommended by Peter Lynch, which are exactly IWM and VB. Now let's go to the computer, to Seeking Alpha, to see the composition of the ETFs, their returns, expense ratios, and so on.
So we're here on Seeking Alpha, and this is the first ETF, IWM. This ETF tracks the Russell 2000 index, which includes the 2,000 smallest American companies in the Russell 3000. Looking at the holdings, we have 16% in technology, 16% in healthcare, 15% in industrials, 15% in financials, and so on. Its top 10 largest stocks aren't the ones we're used to seeing.
Generally, when we look at the S&P 500 index, for example, the largest stocks are Apple, Tesla, Microsoft, Amazon, NVIDIA, among others. Here, its largest holding represents only about 1% of the ETF, and it's Super Micro Computer. There are companies here that, honestly, I don't know. But we have different companies, and companies with smaller market capitalizations than we're used to.
As I said, Apple, Microsoft, and so on are not here. These are the top 10 stocks, and by sector, technology, healthcare, industrials, and so on. In terms of returns over the last year, this ETF returned about 5%. Over the last month and a half or so, it has fallen about 0.7% to 1%. Over the last 5 years it has given us 32%, in the last 10 years 74%, and since this ETF has existed, that is, since the year 2000, it has given us 290%. The dividend yield is about 1.36%, given that this ETF has a price of around 200 and an expense ratio of 0.2%.
The expense ratio isn't very low, but it's not significant either. Generally, S&P 500 and Russell ETFs charge between 0.7% and 0.1%; this one is at 0.1%, which again isn't very significant. Then we have the VB ETF. Okay, this is the Vanguard Small-Cap Index ETF. As you can see, this ETF has a price of about $200. Let's look at the returns over the last year: it gave us 6.77%.
And year to date, in other words, over the last month and a half since January 1st, it gave us an additional 0.4%; over the last 5 years, an additional 42%; and over the last 10 years, an additional 94%. Since the ETF has been available, that is, since 2004, it has given us an additional 335%. If we look at the holdings here, we can see their largest positions.
The sector with the most weight in this ETF is the industrial sector, with about 20%, followed by technology with 16%, consumer cyclical with 13.6%, financials with 13%, healthcare with 11%, and so on. Their largest positions are listed here: Builders FirstSource and other companies I honestly don't know. The 10 largest positions together make up about 3.38%... This ETF holds about 150 stocks.
Now let's compare the two ETFs. Let's pull up the chart and... I don't want the S&P 500, I want to compare it with IWM. Exactly, let's update and see the returns of these two.
So VB is the orange line, IWM is the blue line, and they are very close to each other. In the last year, the one that gave us the best return was VB with 6.7%; IWM had about 5%. Over the last 5 years, VB was also superior, and over the last 3 years too, and in the last year, as we just saw, it was also superior.
We can't see the 10-year figures here because that's a paid feature, but at least over the last 5 years, the VB ETF was superior to the IWM ETF tracking the Russell 2000. So that was the comparison. In a scenario where the Magnificent Seven companies like Apple, Tesla, Microsoft, among others, drove the indices to explode in 2023, Peter Lynch believes that investing in stocks with smaller market capitalization is the way to go.
What do you think of this strategy? Tell me in the comments. Do you think investing in the S&P 500 and Nasdaq, and in these large companies, is still the smartest way to go, or do you think the smartest way is precisely to invest in the stocks that most investors don't even look at?
That's today's video. If you liked it, don't forget to click the like button, and if you're not subscribed, subscribe and turn on notifications so you always know when we post a new video. The link to the Rankia newsletter will be in the description. I'll also leave the links to these ETFs from Seeking Alpha. And that's it, we've reached the end for today. I hope you enjoyed it, and see you in the next video.
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