Simon Evan-Cook: Introducing 'The Costanza Principle'

Generally speaking, it is clearly a good idea for the long-term investor to hold a well-chosen portfolio of smaller companies. It just is. Figure 1 on the right, which goes as far back as our data does, shows UK smaller companies have trounced large caps over the last quarter of a century.  If you are anything like us though, you will see a chart like that and think, ‘crikey, that looks ripe for a fall'. Because, yes - 25 years is a long time, but not necessarily long enough. If you can get hold of the data from Professors Dimson and Marsh, who are the go-to experts in this field, howeve...