Here's a bit of news about last year that hasn't got that much play this year (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 didn't get the same kind of coverage as, say, Katrina, Iraq, Katrina, Tom and Katie, Katrina, Google, and Katrina in last month's year-end reviews, it's worth pausing to note anyway.

The value of small caps
Let's take a quick look at how the returns of these various segments have done over the past 50 years:



Large Caps



Small Caps



*Returns are annualized; Fama and French research portfolios.

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


Large-Cap Growth


Total Market


Large-Cap Value


Small-Cap Value


2005 was the year of the small cap, again. Sure, there are lots of 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% in 2005, including Google, Peabody Energy (NYSE:BTU), Joy Global (NASDAQ:JOYG), ChespeakeEnergy (NYSE:CHK), and Sunoco (NYSE:SUN). It was a good year for search and energy, I guess.

There were, however, 190 capitalized at less than $5 billion that were up more than 100%, including NatusMedical (NASDAQ:BABY), U.S. Lime & Minerals (NASDAQ:USLM), and two more highlighted by our Motley Fool Hidden Gems newsletter. (A couple were 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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This article was originally published on Dec. 22, 2005. It has since been updated.

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.