Shelby Jr: Small-Cap Contrarian After Bear Markets

“This is where Shelby distinguished himself, along with another young fund manager, Peter Lynch. Both avoided the fallen Nifties because, afterbear markets, companies that fall the most are often slow to rise. They filled their portfolios with lesser names that offered better prospects. For the next nine years, small stocks continued to outperform the rest.”

“falling rates favored paper assets and not brick, mortar, and baubles-Shelby populated Venture with financial stocks that had underachieved in the hard-asset prosperity of the 1970s. Besides being timely, bank shares were very affordable. They were selling at 10 times earnings, and their earnings were growing at a steady 12 to 15 percent. Banks' stodgy reputation caused investors to underrate their future prospects. This was a perfect setup for the latest Davis Double Play.”