As you know by now, it's time to review the year and predict the next one. Here's a bit of news that'll get a little bit of play (but not that much because it's such old, old, old news): Small caps had a better year than large caps.
Again.
And value stocks outperformed growth stocks.
Again.
While that fact won't get the same kind of coverage as, I don't know, Katrina, Iraq, Katrina, Tom and Katie, Katrina, Google
The value of small caps
Let's take a little look at how the returns of these various segments have done over the past 50 years:
|
Value |
Growth |
|
|---|---|---|
|
Large Caps |
13.7% |
10.2% |
|
Small Caps |
17.5% |
9.0% |
The total market return during this time was 10.8%.
What does that amount to in terms of a $5,000 investment over 50 years? Let's run the math:
|
Small-Cap Growth |
$366,705 |
|
Large-Cap Growth |
$634,070 |
|
Total Market |
$858,609 |
|
Large-Cap Value |
$3,002,216 |
|
Small-Cap Value |
$16,084,472 |
The year of the small cap, again
There are, of course, many large caps that had a great year. Running a quick screen, I found 18 companies capitalized north of $5 billion and trading on U.S. exchanges that were up more than 100% this year, including Google, Apple
There were 190 capitalized at less than $5 billion that were up more than 100%, including four highlighted by our Motley Fool Hidden Gems newsletter. (A couple in the middle of that upward run, to give full disclosure.)
So, next year, like this year, and the many, many years that preceded it, will in all probability be a good one to add small-cap value stocks to your portfolio.
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Bill Barker loves to sniff out small-cap value. He does not own shares of any company mentioned in this article. The Fool has a disclosure policy.
