Tuesday, December 1, 2015

A Good Month for Small Caps

As we turn the calendar into December, if you're looking for a bargain in stocks, small companies appear to be the best bet. The market as a whole has posted positive returns 18 out of the past 20 years in the period between November 20 and the end of the year, but the Russell 2000, the benchmark for small-cap stocks, has risen an average of 5.6 percent during that period. The Russell 1000 large-cap index has risen by just 3.4 percent in that same stretch.

If you're not ready to get into the market just yet, that's all right. Research has found that most of that growth happens in the second half of the month. Since 1987, the Russell 2000 gains 3.5 percent on average in the last half of December versus 1.9 percent for the Russell 1000.

And the small-cap effect even limps along into January. Gains for that month since 1987 are 0.6 percent for the Russell 2000, and 0.5 percent for the Russell 1000.

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