Goldilocks may have been onto something. Maybe not with porridge, but when it comes to investing, she was spot on. Not too large and not too small has been the sweet spot for portfolios for decades, with mid-cap stocks beating their larger and smaller sisters by a wide margin over the long haul. These firms, with stronger fundamentals and bigger dividends than smaller stocks, but still plenty of room to grow, unlike large-caps, have been a driver of market performance and gave way to the idea of a mid-cap premium.
However, over the last decade or so, mid-caps have fallen flat. Underperforming many of the market’s key benchmarks.
But times could be changing. With a significant shift, lower valuations, and several key tailwinds, mid-caps could once again find their place in the sun. And with substantial dividends and a more domestic focus, the market-cap size could be a major winner going forward. For investors, following Goldilocks’ advice makes a ton of sense.
