Mark Hulbert takes a look at returns on various indices since March 2000 and the results are very interesting:
On the one hand, consider how much red ink you would still be swimming in if you favor large-cap growth stocks – the kind represented by the Russell 1000 Growth Index. If you had invested $100,000 in such stocks at the March 2000 top, your portfolio would be worth $56,180 today, according to data from Frank Russell Company – a cumulative loss of nearly 44%.
(I calculated these returns through Wednesday night from March 24, 2000, the day the S&P 500 (SPX) hit its all time high.)
On the other hand, if you had invested in small-cap value stocks, as represented by the Russell 2000 Value Index, the 2000-2002 bear market would be little more than a distant memory. Your portfolio that was worth $100,000 on March 24, 2000, would now be worth $221,539 – for a cumulative gain of more than 121%.
To be sure, these two indexes represent the extremes. But as is evident from the accompanying table, different market sectors and investing styles have had dramatically different experiences over the last five-and-a-third years. [read the entire article...]
This goes nicely with the charts I showed the other day of the small & mid-cap indices at all-time highs. It really pays to be in the right sectors and/or equity classes.
(hat tip to Kirk)
Update: On a related not, the WSJ has this article today — Small Is Big, but for How Long?: Small Caps’ Run to Record Has Wall Street Wondering If It Is Too Late to Buy In
