Are Small Caps Twice as Good as Large Caps?
Alan Brochstein, CFA submits:
In Friday's drubbing, smaller stocks were absolutely hammered, falling 2.86% (for the Russell 2000) or approximately twice as much as the S&P 500's decline of 1.55%. Could this be a harbinger of a trend reversal? As you can see in the chart below (click to enlarge), the Small-Caps have absolutely exploded recently, rising twice as much since year end as the Large-Caps, with the R2000 up 15.01% compared to the 7.05% return for the S&P 500. Here is the past two years for the ETF for the Russell 2000 (IWM), with the relative price to the S&P 500 ETF, SPY: A few observations:Complete Story »