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Strategies & Market Trends : Value Investing

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To: Tomato who wrote (5590)	12/29/1998 2:08:00 PM
From: Michael Burry	of 78717

Small caps are underpriced vs large caps with a larger disparity than I've ever known. The relative PE ratio of small caps to large caps is historically low when it gets around 1, since small caps typically grow faster. And it hit a low of 1.04 or thereabouts in the early 90's. Now it's like 0.7 or something like that. The market is putting a huge premium on the biggest names in these times of global uncertainty. Small caps have underperformed since 1994, and the Russell 2000 is down this year, while the Nasdaq 100 is up over 80%. I just can't help but think I would be late to the party if now I finally started buying the big caps. Mike

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