To: Boyd Hinds who wrote (698 ) 8/30/1998 1:12:00 AM From: Bob Rudd Respond to
Boyd: Thanks for your thoughtful response. Regarding the ability of some small caps to cultivate a nitch and erect barriers to competition or compete more efficiently - When that occurs, it's great, but the overall small cap universe, especially in the more industrial 70's has been more subject to economies of scale issues. More recently, many tech stocks have turned this on it's ear thru nimbleness (Netscape) but economies of scale and market muscle still rule (MSFT). While there's a tendency to view the average small cap as an emerging growth story (Next MSFT) actually fallen angel is a better description. The average small cap, if there is such a thing, is IMO a once large company that hit a bad patch and became a "value" stock with significant warts. This again is where excess demand or constrained supply can work to turn the situation around and produce superior performance. We don't have excess demand today in most industries.
