Matt Krantz of USA Today advises that waiting for the right time to buy small-cap stocks or exchange traded funds (ETFs) is pretty expensive. Market-timers are usually foiled. When an investor waits for the perfect time to buy small-caps, they miss out on solid returns and the diversification benefits they offer. The one certain fact of timing these stocks is that you won’t buy at the bottom or sell at the top.

Having a strategy to get out of an investment is just as important as when to get in. Set a stop-loss plan such as the 200 day moving average or 8% off the high.

Some of the larger small-cap ETFs include:

  • iShares S&P Small Cap 600 Index (IJR)
  • iShares Russell 2000 Index (IWM)

For full disclosure, some of Tom Lydon’s clients hold IWM.

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.