Chris Tessin of Acuitas Investments recently authored a piece for the InvestmentNews that outlined the historical pattern of micro-cap and small cap outperformance during periods of rising interest rates. Tessin notes that small firms have now lagged large cap names on a 1, 3, 5 and 10-year basis, and that relative underperformance is now producing an investment “opportunity”. According to Tessin, smaller firms have a history of outperforming during periods of increasing interest rates, and… Read More
Writing in Adviser Perspectives, Larry Swedroe of the BAM Alliance evaluates the performance of the 10 largest (by assets under management) actively managed small-cap funds over the period 2000-15 in comparison to the performance of small-cap Vanguard index funds and Dimensional Fund Advisors passively managed structured asset class funds, and also uses S&P Indices Versus Active (SPIVA) Scorecard data for a similar comparison over the 2005-15 period. His broader purpose is to investigate the claim… Read More
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
Joe Mezrich, strategist with Normura securities, and colleague Adam Gould have shown that three factors correspond with small-cap performance: low price-to-sales cost relative to large stocks; economic uncertainty (reflected in dispersion of earnings estimates); and expectations for economic growth (measured by treasury yields). As stated in Barron’s, small-caps should outperform “when small companies represent a good value and when investors aren’t driven to big names.” Market history since 1980 bears this out. Mezrich and… Read More
In his latest column for Seeking Alpha, Validea CEO John Reese takes a look at a strategy that has been a consistent winner even though it focuses on an area of the market — small growth stocks — known for volatility and risk.
Kenneth Fisher says to ignore those who are saying we are headed for a stock-crushing deflationary environment.
Small stocks struggled mightily compared to larger stocks in 2014, but Wells Capital’s Jim Paulsen said that signs are pointing toward a small-cap bounce-back.
Last year, small-cap stocks lagged large stocks by the widest margin since 1998, but newsletter guru Jim Oberweis says not to quit on the little guys.
The U.S. dollar has been red-hot lately, and some of the drivers behind its ascent may be in place for the longer term. That could mean good times for US small-cap stocks, Validea CEO John P. Reese writes in a recent column.
Small-cap stocks have taken a pounding in recent months, but Francis Gannon of Royce Funds recently offered some intriguing data indicating that fundamental-focused investors would be wise not to quit on smaller stocks.