Last year’s prognostications about the events and trends to monitor in 2020 have evaporated as COVID-19 has upended people’s lives and caused massive recalibrations in financial markets. In Q1 2020, we said “goodbye to the bull market”; large market movements became the new normal; correlations and dispersion shifted drastically; quantitative easing returned; and access to Read more […]
S&P Dow Jones Indices recently launched the S&P Global SmallCap Select Index Series. These indices aim to provide broad market exposure to small-cap equities around the world that have a track record of generating positive earnings. As prior S&P DJI research highlighted, the S&P SmallCap 600® outperformed the Russell 2000 by around 2% on an Read more […]
We recently introduced a new measure, capacity-adjusted dispersion, to help conceptualize the relative value of research across different markets. Intuitively, capacity-adjusted dispersion combines the potential opportunity for outperformance (dispersion) and the potential size of active positions (capitalization) in a given market. Exhibit 1 shows the capacity-adjusted figures for several markets, globally. All else being equal, Read more […]
How much should a portfolio manager be willing to pay for research? This is a question any manager has to answer, but it has recently become more pertinent as newly imposed European rules require the costs of investment research to be unbundled from trading. Here is a brief overview of a stylized framework for estimating Read more […]
Despite escalating trading tensions between U.S. and China that built through Sep., large caps were largely unaffected. The aging Bull market (since March 9, 2009) showed no signs of stopping, as the S&P 500 posted new highs and posted an annualized 16.51% equity return and 18.91% with dividends, as mentioned by Howard Silverblatt in Market Read more […]
Small caps are outperforming large caps significantly in 2018, mainly from the tax cuts, growth, strong dollar and concern about international trade. This has driven the S&P 600 (TR) 8.4% higher than the S&P 500 (TR) (year-to-date through Aug.31, 2018,) measuring the 5th biggest small cap premium in history since 1995, and is the biggest Read more […]
The big news in August was that the aging Bull market (since March 9, 2009) became the longest-running Bull market in S&P 500 history, as it posted an annualized 16.6% equity return and 19.1% with dividends, as my colleague, Howard Silverblatt pointed out. While the record-breaking Bull market for the S&P 500 is spectacular, mid-caps and Read more […]
In July, the total return of the S&P SmallCap 600 Growth was 3.75%, which was 1.15% higher than the total return of 2.60% generated by the S&P SmallCap 600 Value. This is interesting since typically growth does not outperform value in small caps when value outperforms growth in large and mid caps. (In July, the total Read more […]
On Friday morning the GDP (Gross Domestic Product) for Q2 2018 is set to be announced, and the consensus estimate from the Wall Street Journal survey of more than 60 economists is at 4.1%, the highest (actual) growth since Q3 2014. Although forecasts greatly vary this quarter, the main factors likely influencing growth are tax policy, retail Read more […]
Much attention has been drawn to small caps by top tier media since the small cap premium is now the biggest in eight years and the fifth biggest in history. The outperformance of the small cap stocks versus the large caps is being driven by the current economic environment of growth, rising interest rates, inflation and Read more […]