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The purpose of our blog is to provide ethical and endlessly curious views into the world of money and investing. Hopefully, as you read our blog posts, you will increase your knowledge about the use of money, improve your investment results, and reduce the risks and costs associated with the use of money. Our commentary is not crafted to support any political agenda, but will comment on the potential consequences of both current and projected actions of our Government (and others) on the economy, investments, and the efficient use of money.

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The Small Cap Rally

by Mike LaFontaine on May 3, 2010

Does the small cap asset class make up a sufficient portion of your stock portfolio?  If not, you may be missing out on a crucial segment of the market, as highlighted in the Wall Street Journal article “Small Caps Loom Large.” While many financial commentators refer to the past ten years as the “lost decade”, they are doing so based on the lackluster performance of popular benchmarks such as the S&P 500 Index or Dow Industrial Average.  During that same decade, the small cap asset class performed much better.

While Wall Street’s biggest stocks have lost ground since the decade that began Jan. 1, 2000, small-capitalization stocks have soared. The Standard & Poor’s 600, a small-stock index, gained nearly 100% during the period, producing an annualized return of 7.1%. The large-cap S&P 500, by comparison, fell nearly 18%, representing a loss of almost 2% a year. — WSJ Article

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