When large caps inevitably correct, what do you think will happen to small caps?
So large caps have had an incredible runup. Costco, Nvidia, Apple, it's all just become ludicrously overvalued (Costco's ev/ebitda doubled since 2019, nvidia's ev/ebitda went 6x). Around the same time there's been this trend of small caps getting crushed into the dirt, not in small part due to extreme short action. Do you think that when the large indexes finally correct small caps will just go down more? Or will at some point all doom and gloom be priced in and investors will stop selling their shares?
Would love to hear your thoughts!
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lailie : you may be correct about Cost, AAPL etc. but they actually generate cash. the cannabis companies, which i did not bother to research. do they generate cash? EBITDA is not the same as cash, not a great metric to use, but all the banks use it, for companies that don't generate FCF
Wilson_wu : I am also curious, can small-cap stocks hold the pressure of the broader market?