The prevailing view on Wall Street is that large-caps finally will shine in 2011 because a prolonged slump has left stocks like Microsoft, Cisco Systems, Wal-Mart tores, PepsiCo, JPMorgan Chase, Johnson & Johnson and much of the drug, technology and financial-services industries at modest price/earnings ratios. In addition, large-caps give investors more exposure to high-growth markets overseas, given the global reach of multinationals like Coca-Cola and Intel.
Investors such as Bill Miller of Legg Mason and Jeremy Grantham of GMO now favor larger stocks. This could be because even after the bull run of the past two years, the Standard & Poor's 500 (which comprised the big cap stocks) still would have to advance 23% from its current level around 1265 to reach its peak of 1565, set in October 2007. I am invested in Bank of America (BAC), definitely a big US stock. I am hopeful that BAC would trend higher in the months ahead, and am even prepared to collect more should its price retrace.
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