Investors in small-cap stocks have rarely had it this good. The Russell 2000, which stood below 400 in early 2009, is quickly approaching the 1,200 mark. It’s as though two decades worth of gains have been packed into just five years. The small-cap surge shouldn’t have come as a total surprise. As I noted on our sister site InvestingAnswers.com a few years ago, small-cap stocks often outperform large-cap stocks when the overall economy is coming out of a recession. Post-Recession Performance (prior to 2009) Yet as we turn the page and head into… Read More
Investors in small-cap stocks have rarely had it this good. The Russell 2000, which stood below 400 in early 2009, is quickly approaching the 1,200 mark. It’s as though two decades worth of gains have been packed into just five years. The small-cap surge shouldn’t have come as a total surprise. As I noted on our sister site InvestingAnswers.com a few years ago, small-cap stocks often outperform large-cap stocks when the overall economy is coming out of a recession. Post-Recession Performance (prior to 2009) Yet as we turn the page and head into 2014, it’s crucial that you understand how a changing economy will influence this trend. For a host of factors, small caps are likely poised to underperform their large-cap peers.#-ad_banner-# In August, I explained why investors should shift assets into larger companies, and since then, the reasons for owning big-cap companies have only strengthened. First, the market has moved even higher since last August, with the Russell 2000 up another 9% and the S&P 500 Index rising another 8%. If investors are looking to lock in profits in 2014, then larger companies, especially those with robust buyback and dividend policies, are… Read More