Joe Morris of Ignites writes that small-cap exchange traded funds (ETFs) have been in existence long enough for the market to digest their flows. However, some investors think intense buying by hedge funds and private equity firms, in addition to the popularity of ETFs, could be unevenly inflating small company stock prices.

The Wall Street Journal reports some of the small-cap stock gains don’t reflect the health of the company.  The price-to-earnings ratio is already skewed because they’re already too pricey. The original WSJ article mentions every dollar invested in smaller companies represents a bigger percentage of its market size.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.