Is it time to ditch blue chip stocks for small caps?

We’ve been suggesting solid, dividend paying blue chips for years, says Merryn Somerset Webb. But they’re not looking so cheap any more. So is it time to look to smaller companies instead?

Income paying defensives; companies with global franchises; international firms with pricing power; brands with inbuilt inflation proofing; mega-caps with huge cash balances and dividend paying capacity: I'm bored with them all.

I've now been telling you to buy and hold these sorts of things for four years, maybe more. I've talked about them endlessly; I've reported on countless other people talking about them; and I've recommended all the funds that pick them as well. Now, one of the great truths of successful investing is that it is boring you have to choose good stocks at the right price and keep holding them until they aren't the right price any more. It is the fact that most flighty fund managers can't do this that keeps me in my carping-from-the-sidelines job and, mostly, your pension fund in the red.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.