The Russell 2000 peaked on 9/19 and since that time Small Cap stocks which comprised the bulk of portfolios have lagged or at least not been on the rampage they once were.
In addition the valuation gap between Small Caps and High Quality Large Caps is significant to the point to make me go “hmmmm”.
In addition, during the last recession in 2003, small caps lept ahead during the first leg of the rally into December. However, by 2004 Large Caps took the lead for the year and in back testing our model did extremely well. I’m following what I think could be similar pattern in 2010 as Large Cap / High Quality starts to assert itself, especially with a declining dollar. We’re not abandoning Small Caps, just adding more Large Caps in lieu of Small for balance.
Damn Yankees. You just had to know if they lost the World Series they’d spend even more money this off season.