Scando, The small caps, as a group, rarely outperform large caps. There is a reason for this. In the small cap group, a huge number will go belly up and more will barely eke out a living. Though there are small cos. that are in excellent small niches, and many who have the chance to be the next Microsoft, most small cap cos are small cap because they aren't very good cos. And, though there are large cap firms like Amazon, most large cap cos. have the financial wherewithal to take advantage or at least survive any business conditions.
Most folks don't realize these simple facts. I still believe that the small cap lake is better for fishing, but it is has more old boots that the large cap lake.
I recent years, we have seen the advent of these small cap indices and I don't see them ever outperforming large caps over a 3 year period. One year, all bets are off.
When folks look at the outperfomance of "small cap" stocks in the 1970s, they are talking about what we now call the Nasdaq, which is not all that small and is somewhat selective.
Folks notice when a small cap stock goes up 1000% while GE goes up 15%. But they forget all the ones who have to close up shop, which GE is not likely to be forced to do.
MB
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