Performance changes in small-cap stocks can happen quickly as they are typically less liquid. The Fed began to lower interest rates in mid-January 2001. Small companies tend to be more domestically focused than large companies, and as a result, are generally more responsive to changes in the U.S. economy. As evidenced by the current valuation disparity, expected growth potential, historical trends in performance between small and large cap stocks, and responsiveness to changes in the US economy as described above, we believe a solid case exists for small caps in the context of a more broadly diversified portfolio. In the Middle Ages, mapmakers had a standard practice for designating unexplored territories.
Today there are no dragons.
Technology has helped dispel many of the myths that once colored our view of the world and even beyond. We can now log on to the Internet to view the latest NASA mission photographs, beamed to us across 100 million miles of space. We can travel anywhere in the world, from the top of Mount Everest to the Costa Rican rain forest, with a camcorder or a laptop to record our journey. Given these new opportunities to explore and understand the world, it' s surprising that many people are still reluctant to invest overseas. Of those who do, a great deal have no exposure to the emerging markets.