Relative Strength of Small vs Large Cap Stocks
Wednesday, January 18, 2012 at 09:15AM The chart below highlights the relative strength of the Russell 2000 versus the S&P 500. When the line is rising, it indicates that small cap stocks are outperforming while a falling line indicates that large cap stocks are outperforming. Small and large cap stocks had similar returns for much of the first half of 2011. In the second half of the year, however, small cap stocks saw significant underperformance. Although it made up some of that lost ground in the last three months of the year, the Russell 2000 underperformed the S&P 500 for the first time since 2007.
Small cap stocks are starting off the year slightly ahead of the S&P 500. After ten trading days, the Russell 2000 is up 3.32% compared to the 2.87% return of the S&P 500. So what does the rest of 2012 have in store for small and large cap stocks? Will small cap stocks retake their leadership role, or will they underperform for the second year in a row? Let us know in the poll below.
Subscribe to Bespoke Premium and gain access to our 2012 outlook piece -- The Bespoke Report -- when it is released this Friday.
Reader Comments