If the Federal Reserve lowers interest rate levels, small capitalization technology stocks will prove undervalued. If the Federal Reserve lowers interest rates, small capitalization technology stocks will prove overvalued.
Small capitalization technology stocks have the most leveraged economic models. That is, with higher capital and human resources, their productivity rises exponentially. Lack of resources, capital, human and technology could easily cause them to fail.
Small capitalization technology stocks hence are very dependent on the economic cycle, which the Federal Reserve is trying usually to smooth.
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