"Over the past five years ........... the trend has been very much in favour of smaller cap, mid-sized stocks with the ASX20 and ASX50 unable to keep up". I would agree, but only at the very large end of the market. The ASX50 Accumulation index (up 43%) has actually slightly outperformed the Small Ords Accumulation Index (up 40%) over five years.
Thoughtful essay Rudi- excuse the pun, but totally on the money as they say.
"when investors look three years out, they see a substantially larger company with substantially more customers, sales and profits." What probability is that look out is wrong?
To Graeme: don't just rely on broad indices to form a view, or draw conclusions. The Small Ords is heavily populated with micro resources companies, which should be taken into account
To Nan Shi: as an investor one has to rely on forecasts and weigh up risk. If you doubt whether every single industrial company might grow over the next three years you cannot own any company other than for short term trading purposes. I personally have been quite successful in identifying sustainable growth, and so have others. To illustrate this with one extreme example: people have doubted CSL in every single year since listing, yet it still is, and remains, a superb growth story in Australia. This is what investing is all about; identifying which companies will do well over an extended number of years, and enjoying the wealth benefits as a result of it
To Alan: Thnx. This is what my personal research is all about; working out what effectively works in the share market over an extended period of time, not copying what everybody says should work