Investors are to be forgiven if they see little point in investing in U. All trailing returns are calculated as of March 23, Large-cap stocks have also outperformed their smaller cousins over if you look at the past 1-, 3-, 5-, and even year periods. If large companies are both less risky and yet are also capable of outperforming over such a lengthy timeframe, why consider anything else?
The answer is that over a longer timeframe, the picture changes dramatically. And mid-cap outperformance is even more pronounced over 25 and year periods. So what happened to change the investment picture? This provides an added boost to shares of the large companies that make up the components of these indexes. When stocks gained dramatically in the spring of in the wake of the bear market caused by the sudden outbreak of the COVID pandemic, it was small-cap stocks that led the way.
Just as large-cap companies tend to outperform during periods of slow economic growth because of their greater ability to cut costs, small- and mid-cap companies tend to outperform when the economy is growing stronger, as was often the case in the s and other period of the post-World War II years," says Jim Paulsen, the chief investment strategist at Leuthold Group, a money management and market-research firm.
And David Kotok, the chairman and chief investment officer of Cumberland Advisors, believes that there should always be a place for mid-cap and small-cap stocks in a properly diversified portfolio. I think the best answer for investors is to be in sectors and industries with growth trajectories and in companies with solid balance sheets and positive earnings. There is nothing wrong with mid-cap or small cap companies with those characteristics. Over the past 20 and 30 year periods, U.
But over the past 15 years, large-cap stocks have taken the lead for a host of reasons that aren't short-lived. Top Stocks. Your Money. Personal Finance. Your Practice. New releases. Add to Wishlist. The CNBC mobile app lets you access accurate and actionable business news, financial information, market data and primetime programming faster than ever. Breaking news alerts are delivered instantly to your phone, enabling you to stay on top of the market. Watch the live stream, video clips and episodes directly on your mobile phone or Android TV device so you can keep up with your favorite CNBC primetime television anytime, anywhere!
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