When I look at financial institutions, the opportunities are from small caps to mega-caps.
FORBES: Overlooked Financial Stocks And European Winners Could Be Game Changers
But shorten your time horizon, and small caps look far less attractive, Mr. Ramsey says.
And during the past 12 months, megacaps have jumped 6.9% while small caps have lost 0.9%.
At certain periods, such as during the 1990s, large caps have outperformed small caps.
They have better growth than small caps since they have more access to capital.
However, small caps were hit even harder, with the iShares Russell 2000 Index ( IWM) down over 3%.
When Eminence started in 1999, the fund primarily invested in small caps, which were cheap at the time.
Or Inhibitex ( INHX), another great gainer that helped make the small caps sector such a winner lately.
This indicated that the January effect, where small caps outperform, was going to be followed in 2012-2013.
Small caps were up 2%, while large caps followed closely behind gaining 1.9%.
That means investors are paying 27% more for small caps based on valuations.
Small caps have now outperformed large caps for nearly 14 years the longest such period ever seen, according to Ned Davis Research.
We talked about Apple (AAPL), small caps, oils, commodities, industrials and tech.
Over shorter periods small caps have tended to do better when the economy and the stock market have been recovering from a recession.
Dull but highly tax-efficient and extremely low cost: This no-load index fund attempts to mimic the Wilshire 5000 by investing in large, mid and small caps.
What he didn't realize was that he was on the cusp of an extraordinary bull market in small caps that would last eight years.
Even Vanguard, typically a bastion of common sense, offers 18 ETFs that go so far afield as to track energy and non-U.S. small caps.
According to the Center for Research in Security Prices, microcaps outperform small caps and large-caps stocks over time, although returns deviate by wider degrees.
FORBES: Why You Should Own a Really Diversified Portfolio in 2012
Smaller, though, is riskier, given that small caps have low liquidity and share prices that can fluctuate wildly on a wee bit of bad news.
Or what if they're both managed funds investing in small caps or in a specific industry sector and you sell one and buy the other?
For all of 2012, megacaps and small caps are essentially even.
Starboard is an activist investment firm that focuses on small caps.
FORBES: Office Depot: Activist Fund Takes 13.3% Stake, Calls Stock 'Deeply Undervalued'
In contrast, most Wall Street investment teams are designed to cover only one area of the market small caps, large caps, tech stocks, healthcare, etc.
The effect of this was to push up the performance of small caps relative to that of large caps in the first weeks of the year.
Investors try to get ahead of the game as early as the end of October, pushing up the performance of small caps well before the new year.
Based on a comparison of stock prices to per-share earnings and growth rates, he calculates, small caps now are trading at an 11% premium to large caps.
Historically small-caps outperformed large-caps in 80% of all Januaries by 3 percentage points per year (small-caps being defined as the bottom 30% of stocks market cap weighted).
Chuck Royce thrives on obscure small caps in mundane markets.
Since 1999, when the premium was greater than 25% at month's end, megacaps have outperformed small caps by an average of 3.7 percentage points over the following 12 months.
Megacaps' chronic underperformance has left many investors with the impression that small caps are where the action is, says Doug Ramsey, chief investment officer at Leuthold Weeden Capital Management.
应用推荐