Pressing the swap from Small Caps to Large

As a follow up to last weeks letter, we’re pressing our transition to high quality large caps after the tremendous run in the Small Cap market.   The Price / Earnings ratio of Small to Large shows that PE’s are 60% higher for Small Caps versus Large.  The risk reward of Small Caps isn’t that attractive at present.  Adding to this is the fact that while the Dow and S&P 500 are hit a new high yesterday, the Russell 2000 hasn’t even made it back above its 60-day moving average, in other words Small Caps are beginning to lag.