Subject: Small Cap Stocks
Will small stocks stink forever?

Little companies are supposed to earn higher returns over time than big ones, but that hasn’t been the case for more than a decade. Since the beginning of 2014, the S&P 500 has grown at an average of 13.2% annually; the Russell 2000 index of small stocks has gained just 7.2%.

The market value of the five biggest companies in the S&P 500 is nearly five times the combined market value of the Russell 2000 index, according to Steven DeSanctis, an equity strategist at Jefferies. In fact, Nvidia alone—at its recent market value of $4.22 trillion—is 65% more valuable than all the stocks in the Russell 2000 combined.
The 6.6% annualized total return on small stocks over the past 10 years trails large-company performance by 7.3 percentage points, says DeSanctis. (All figures include dividends.)

That’s the widest gap going back to 1935.

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