Since 1925, market data indicates that small-cap stocks outperform the broader stock market in January.
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What's intriguing here is that the biggest stock market rises have been with small-cap stocks.
Half the money goes into late-stage venture capital, the other half into small-cap stocks.
Over the long haul, small-cap stocks have been shown to outperform their larger counterparts.
Investors who want to reduce their risk should cut their exposure to small-cap stocks.
Small-cap stocks still might be worth buying if they were inexpensive in relation to fundamentals.
Look at how much you have allocated to large-cap stocks, small-cap stocks, international stocks and bonds.
Extend the time horizon out ten years, and the performance disparity between large-cap and small-cap stocks widens.
Unlike so many of America's small-cap stocks, few of Japan's are sexy technology companies with strong growth potential.
But by comparison, the Russell 2000 Index, which is a broad measure of riskier small-cap stocks, is up 12%.
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Click here to download "Ten Small-Cap Stocks to Buy Now, " a new special report from Forbes Growth Investor.
The Russell 2000, a market that tracks a large constituent of small-cap stocks, rose 12.1% from January through March.
Investors in small-cap stocks have traditionally hoped to earn higher long-term returns at the price of greater short-term volatility.
Indeed, after their dismal year, small-cap stocks seem like a low-risk, high-reward proposition.
In Photos: Click here to see 12 Small-Cap Stocks With Big Dividends.
Now, however, a group of small-cap stocks are getting into the dividend game.
Even the mid-cap or small-cap stocks file data and information with the SEC which are also available to the public.
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These winners have other features in common: They all focus on small-cap stocks and they tend to take a value-oriented approach.
Small-cap stocks, for instance, have a long-term correlation of 0.72 with large-cap stocks, according to the Ibbotson SBBI 2011 Classic Yearbook.
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Portfolios that hold a higher concentration in small-cap stocks and value stocks have more risk than the market as a whole.
The annual fire sale of small-cap stocks may be happening several weeks early, which could give savvy investors a ground-floor entry point.
FORBES: The Week Ahead: Don't Be Late for the 'January Effect'
Respondents said that large-cap and small-cap stocks should deliver the highest total returns, with both asset classes receiving similar numbers of votes.
In the first quarter of the year, small-cap stocks fared very well.
Historically, small-cap stocks have outperformed the broader market coming out of recessions.
Yet small-cap stocks involve higher risks than their larger counterparts, analysts observe.
We should remember, however, that favorable reaction to corporate earnings announcements helped small-cap stocks stage a nice rally in late April last year.
They are more likely to find bargains among the small-cap stocks that are less well researched than the likes of Microsoft or Exxon Mobil.
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Large-cap stocks that have been around a long time tend to move less than small-cap stocks, and therefore tend to have lower implied volatilities.
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Our research in the Almanac shows that most of the January effect, where small-cap stocks outperformed large caps, happened the last two weeks of December.
Brown still believes that over the next few years small-cap stocks will continue to outperform their larger peers, but this summer large-caps may narrow the gap.
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