There are many interesting things going on right now and one of them, in my view, is the sharp rally in micro cap stocks in the past four trading sessions. I’ve noted in earlier missives that small cap stocks are having a very tough year so far, especially at the end of the third quarter (just in time for your quarterly reports, I’m afraid). The following chart shows the relative performance… Read More
Every investment strategy requires patience. Let’s say, for example, that you believe, as we do, that small cap stocks tend to outperform large cap stocks over time. You’ve got the empirical data going back to 1926 that clearly shows, with statistical significance, that small stocks outperform large ones. Small stocks are more volatile than large stocks, but that fits elegantly with the theory that to earn a higher return, you… Read More
The recent underperformance of small cap stocks has me wondering whether the outperformance that small cap stocks has enjoyed over the last decade could be coming to a close. Over the last ten years, the S&P 500 has gained 7.16 percent and the S&P 600 Small Cap Index has earned 9.81 percent a year, an outperformance of 2.65 percent per year.
