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The stock market is down today, thanks the latest unemployment news. With the labor market continuing to show signs of weakness, Wall Street is working through the idea that economic recovery is going to be slow in coming. However, many believe that recovery is on its way, and that now is a good time for small caps.

The Motley Fool points this out about small caps:

During the last bear market — when most stocks nosedived – small-cap stocks absolutely soared, handing savvy investors 22% a year over the next three years.

Their amazing run during the 2001-2002 recession was no fluke. Starting in the middle of the brutal recession of 1974, small caps made an epic run. Shooting up during the recession and extending their run long after the economy recovered, they returned 28% a year for nearly a decade.

And beginning in 1991, small caps powered right through a sharp downturn and kept gaining — handing investors 116% over three years.

The best part of all of these bits of history? Small caps started their run smack in the middle of the down economy — not after the turnaround. And that means right now is a great time to buy.

With stocks on sale, it is possible to find some truly spectacular deals. And with small caps likely to do well in a rebound, it might be the perfect time to get in on the market.

Small caps can be risky

It is important to understand that small caps are often considered riskier than large caps. Their smaller market capitalization means that there is less cash available to shore the company up. As a result, it is important to be discerning in your small cap investment choices. You should look for companies that show good potential, and that have healthy fundamentals.

Another thing you can do is consider small cap index funds. There area number of index funds and ETFs that provide you with the ability to take advantage of the growth likely to be experienced by small caps, but at the same time spreading the risk around and helping you diversify a little bit.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

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It’s been a good week for real estate. Signs that the housing market is stabilizing are helping propel recoveries for home builders and for real estate funds on the financial markets. Indeed, investors are becoming interested in real estate related investments again in the hopes that they can get in now and catch a ride on the recovery.

Home builders are seeing an increase, thanks to recent data that housing starts continue to rise, and that the home builders confidence index has gained some ground. The Street reports on the success that home builders are seeing:

Rehaut says supply appears to be more manageable, while demand has begun to stabilize and even slowly re-emerge. “In such an environment, we believe the builders will once again demonstrate positive order growth — historically a powerful positive catalyst — and home-price declines will near their end, resulting in the abatement of impairment charges,” he wrote in a note.

While home prices are likely to continue to decrease — at least for a little while — they should be at the bottom quite soon in most markets, and are even rising in some markets.

Additionally, real estate funds are on the rise. The good news from the housing market means that REITs and other real estate funds are doing well. From ETFs to mutual funds that are heavy in real estate investments, investors are starting to take a look. These types of funds are also popular amongst folks without the capital to buy real estate. It allows them a piece of the action.

In the end, it looks as though real estate investing is likely to become popular again. Investors are banking on a recovery, even though peak housing prices are years away. If they can hold on to home builders and real estate funds for the next five to 10 years, they expect to make some solid profits.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

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One of the important aspects of investing is diversification. Most people think of diversification as something that happens across asset classes. This is true, but you should also remember that diversification also means participating in international investments. Considering foreign stocks is an important of your investment planning and decision making. While there is always the chance of loss, foreign investments can help your portfolio. CNN Money reports on the advantages of adding international investments to your portfolio:

Now, it’s possible that globalization is tightening the links between global markets. But most investment pros believe — as I do — that the returns of U.S and foreign shares still diverge enough in regular market conditions so that owning both types of stocks rather than just one can give you a portfolio that’s less jumpy over long periods.

As a result, investors who add foreign shares to their U.S. stock holdings should be able to earn the same return as an all-domestic portfolio with less volatility. Or, to put it another way, adding foreign shares should allow you to earn higher returns at a given level of risk.

This doesn’t mean that you should buy into foreign equities willy-nilly. Like any other investment this requires thought. While you can add individual stocks and other investments to your portfolio, I personally like the idea of using index funds or ETFs. There are plenty of funds based on groups of foreign investments and indexes.

You should also realize that different foreign investments carry different risks. While emerging markets might be poised for growth, they are much riskier than investments in more established markets in Western Europe and Japan. So choose your asset allocation in international investments carefully.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.