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Market Update

Is It Time to Get Small?

Small-cap stocks took a beating last year, and despite the recent rebound, there are still good opportunities to be had.

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When news hit in October that  Valeant Pharmaceuticals (VRX) may have been recording false sales of products to one of its affiliates, the stock fell by 25% in one day. However, the claim also sank another part of the market: small-cap stocks.

At the time, the small-cap market was standing on shaky ground. Biotech stocks had been driving the sector higher for years, but runups in prices were starting to worry investors. Then, in September, Hillary Clinton said, if president, she would cap drug prices, which caused more concern. Then the Valeant accusations began to fly.

Bryan Borzykowski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.