Hulbert: Large Caps Now and Small Caps in January

Small-cap stocks outperform large caps, on average, over the long term, but almost all the small-cap advantage occurs in the early part of the year. This according to a recent MarketWatch article by Mark Hulbert. “As you can see from the chart below,” he writes, “their advantage gradually diminishes as the year progresses, and is actually negative by the last quarter of the year.” The widely-accepted theory on the relative performance of these two asset… Read More

MarketWatch’s Hulbert: Now Could Be the Time for Small-Caps

Mark Hulbert writes in MarketWatch that “all of [the small-cap] sector’s much-vaulted historical relative strength has come at the end of December and early January,” as reflected in the monthly average outperformance of small-caps vs. large-caps 1926-2015. According to Dartmouth professor Ken French, small-caps usually hit a low around December 20, followed by the highest yields in January. The long-term outperformance by small caps is 2.2%, according to Ibbotson data. French’s day-by-day analysis suggests, however,… Read More

Two Guru-type Small Caps for January

In his latest column for Seeking Alpha, Validea CEO John Reese looks at two small-cap stocks that have strong fundamentals and which might benefit from the so-called January Effect, in which small stocks tend to perform well in the early part of the year. “Behavioral finance pioneer Richard Thaler noted in a 1987 paper in Economic Perspectives (“Anomalies: The January Effect”) that the effect was observed not only in the U.S., but in many other… Read More

Reese on How to Address the January Effect

In an interview with Business News Network of Canada, Validea CEO John Reese recently discussed the “January Effect”, and how investors should position themselves in light of the seasonal trend. Reese notes that historically, January has been by far the best month for stocks, and that the strength has largely been due to very big gains for small stocks, a phenomenon that many attribute to tax-loss selling. At the close of one year, Reese says,… Read More