http://www.thestar.com.my/Business/Business-News/2014/01/30/Runaway-prices-of-smallcap-stocks-point-to-signs-of-overheating/
http://online.wsj.com/news/articles/SB10001424052702303847804579477901624148112
On some measures of value, small-cap stocks—which are often used to juice a portfolio—look pricier than they ever have been. With that in mind, investors should consider cutting their holdings of small companies and favor the least speculative parts of the market, some experts say.
Investors expect bigger returns on small-company stocks, typically those with a market capitalization of $5 billion or less, than their larger peers. That is because small companies have uncertain earnings and revenues, making them riskier.
Some investors prefer measuring the stock price against sales, since small companies may not have profits. By that method, such stocks look even more overpriced.
To the extent that an investor keeps a small slug of small caps, he should tilt toward high-quality companies with earnings and away from companies not making a profit, Mr. DeSanctis says. That means being wary of biotechnology and pharmaceutical companies, many of which aren't profitable.
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