U.S. stocks were little changed on Monday, with investors mostly taking a pause following a sharp rally on Friday. Rainier Investment Management Senior Equity Portfolio Manager James Margard says stocks are still the best bargain out there in the investment world.

SHOWS: NEW YORK, USA (NOVEMBER 3, 2014) (REUTERS - ACCESS ALL)

1. RAINIER INVESTMENT MANAGEMENT, SENIOR EQUITY PORTFOLIO MANAGER, JAMES MARGARD, SAYING:

JOURNALIST ASKING JAMES MARGARD: 'Now Jim, you manage a small mid-cap fund, small cap stocks of course came under a lot of pressure earlier this year but you are not concerned too much about the volatility of the Russell 2000, why not?'

MARGARD: 'Well there is day to day volatility, there is a lot of ETF activity there but it does not affect the underlying strength of these companies. And the valuation of the market with this correction now is back into its normal range versus large cap stocks, so we see there is a lot of opportunity and over a long period of time small caps tend to outperform large caps.'

JOURNALIST: 'Historically. Something you do not often hear in markets nowadays is that you feel that stocks today are undervalued. How so? Most people are saying they are overvalued, way overvalued.'

MARGARD: 'Well everything is relative, so first of all versus its history stocks are selling at about the multiple they have sold at on average over the last eight years or so. But, other investments, fixed income investments, cash investments are extremely expensive when you compare the relative yields. Earnings yield of the market at 6.5 percent, the yield of the ten year treasury at 2.3, stocks still are the best bargain out there in the investment world.'

JOURNALIST: 'But what about small and mid-cap stocks, we have seen small caps start to rally again?'

MARGARD: 'Yeah, I think they were due for a correction. You know, as of the end of last year the PE multiple differential between the S&P 500 and the Russell 2 was about 10 multiple points which was a little bit out of line after the huge run in small caps last year. But, at this point they are back to amore normal 6 multiple point or so premium to the S&P 500 which is what it normally is.'