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How timely the award of the Nobel prize in economics for research on how information and the lack of it can affect markets. In stocks, for example, the lack is almost unprecedented. 

“We have focused our eyes and ears on the opinions offered by some of the sharpest financial and economic minds in the world,” says Gerald Perritt, himself one of the sharper analytical minds in the business. 

“However,” he concludes, “we know that none of these people actually know what the future will behold.” The bare truth, he says, “is that there is no precedent for what happened Tuesday, September 11, 2001.” 

Ultimately, says Jim Griffin, economist with Aeltus Investment Management, “it gets back to faith after all, even for hardheaded analysts.” Sept. 11, he adds, “was and is a challenge to that faith.” 

That faith is based in the historical record showing the U.S. stock market always rises from the worst of times, often reaching a joyous peak that elicits comments about it being the best of times. 

The “best of times” for most of today’s investors are of recent, painful memory, having occurred just a couple or so years ago, and faith is being tested as it never has since World War II. 

But for those of great faith, rays of hope can be spotted in a flood of investment commentary, most of which typically and adroitly avoids taking an unequivocal stand, one from which there is no retreat. 

Robert Morrow, a Bradenton, Fla. private forecaster who works mainly by institutional clients, and whose views have sometimes been uncannily correct, states boldly that the Standard & Poor’s 500 index will double by midyear 2002. Such a rare, clear stand can break a forecaster. 

While urging caution, and as usual limiting himself to facts, Perritt, editor and publisher of “Gerald Perritt’s Mutual Fund Letter,” does take special note that investors have about $2 trillion “sitting” in cash. 

“During times of financial turmoil,” he says, “it pays to sit on your hands.” But as the economy begins to improve, which many economists expect will be next year, he expects much of that money will return to stocks. 

Meanwhile, writing in “The Babson Staff Letter,” analyst Lance James refers to the recent return to leadership of small-cap stocks as “heartening and justified” in spite of the so many doubts overhanging the market. 

The resurrection of smaller stocks has tended to be overlooked amid the collapse of so many larger issues, but it is measurably real and likely to continue. That’s the history of so-called small-caps: When they start moving up, they continue rising for a run of several years. 

Small-caps did well from 1979 through 1983, and for more than three years beginning in 1991. But by the turn of the century, James states, the small-caps suffered from an unprecedented bias for larger stocks. 

Then, as the overall market began its plunge, the smaller companies began their ascension, an event unsighted by many smaller investors still licking their wounds and, importantly, lacking investment information. 

These companies, explains James, are “less adept at providing information to investors.” You may have to do your own research. But it is this very lack of information that makes that homework pay off – and big. 

Larger investors, and the institutions that provide them with information, generally concentrate their efforts on large-capitalization companies on which there is already a glut of information. 

Moreover, institutional investors deal in investment sums too large to be accommodated by the smaller companies. 

Still, small companies often grow, and information about them spreads, and then the big investors move in. 

In short, the lack of information, especially today, can give small investors in small-cap stocks an advantage over the big guys. 

John Cunniff is a business analyst for The Associated Press