December 11, 2010
One Corner of Stocks That Fared Just Fine
By PAUL J. LIM
AFTER a four-month stock market rally, some investors are starting to wonder if equities could be on the verge of finally outshining bonds.
That is a valid question if you are focusing on large-cap stocks. Yet throughout this so-called lost decade for equities, another category of equity never really took a back seat to bonds: shares of fast-growing small companies.
This year, the Standard & Poor’s 600 index of small-company stocks has gained 25 percent. That is nearly double what the S.& P. 500 index of large stocks has returned year to date. Even more impressive is that small-cap stocks are up around 8 percent annually over the last decade, a period in which blue chip stocks have gone nowhere, with an annual return of 0.8 percent.