Investing - Theory, News & General • Re: Will Small Caps Get Slammed Harder Than Large Caps in a High Inflation Environment?

If you are looking for general assumptions about small caps, the best summary might be that they are fundamentally believed to be pro-cyclical. So, in other words, they will do whatever the market/large caps are doing but will do it even more so. So if market crashes 30%, they crash 40%. When the market rebounds 50%, they rebound 80%. When large caps have trouble growing and are in crisis due to economic conditions, small caps go bankrupt. So my baseline assumption would be that when anything "bad" happens (including inflation) expect small caps to crater, hold on for a few decades and maybe they outperform in the end.

Be careful making assumptions; TIPS going down in value when inflation went up in 2022 (I think you were alive then) is an example of how easy it is in retrospect to explain something but how "surprising" it can feel in the moment.

But did not SCV perform much better than the general US market during the lost decade? I know your comment was about SC in general, not SCV.

Statistics: Posted by snowday2022 — Sat Aug 15, 2026 8:07 pm