So far this year, small-cap growth stocks have surprisingly been lackluster. After 2013, when it gained a scorching 38.8 percent, the Russell 2000 has delivered a tepid 0.62 percent year-to-date (YTD).
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Performance has been so poor, in fact, that the spread, or bifurcation, between the 12-month return residuals of small and large caps is at its widest since the dotcom bubble of the late 1990s and early 2000s. This bifurcation is one of the largest since 1975.
According to Morgan Stanley, we're in the worst beta-adjusted period for small-cap stocks since the late 1990s. The 12-month return in August for small-caps was -9.7 percent, placing it in the bottom 6 percent of any 12-month period since the mid-1970s.
The bifurcation is more than apparent when you compare the year-to-date (YTD) total returns of the big boys (those in the S&P 500 Index and Dow
Our strategic view of the outlook on the small cap stock market is still bullish.
Our macro outlook on the US is basically constructive. Our basic read on the macro picture is quite positive, so we are less concerned about some of the things (credit risks, inflation) that some visitors have worried about. This has created a broadly friendly environment for risk assets, as investors become comfortable with the durability of the expansion. Therefore, we continue to have a clear bullish bias on