Worth noting small caps depend heavily on the liquidity regime. Russell 2000 has trailed the S&P 500 by roughly 90 percent since 2014, in part because tight financial conditions punish duration sensitive cash flows. Selection alpha is real, but the macro window for the asset class matters too.
Respectfully, the data shows the opposite for most retail investors. Median small cap underperforms the Russell 1000 over rolling 10 year windows, and survivorship bias on those 10x winners is brutal. The ‘only you can’ framing skips over how few actually pick them.
Russell 2000 trailed Russell 1000 by roughly 300 bps annualized since 2010. The premium concentrates in profitable small caps, not the broad universe. Equal weighting changes the picture significantly.
Respectfully pushing back: only about 4 percent of stocks deliver the lifetime returns. Survivorship makes the 10x feel inevitable in hindsight, but the base rate is brutal. Process and position sizing matter more than the hunt.
Worth noting small caps depend heavily on the liquidity regime. Russell 2000 has trailed the S&P 500 by roughly 90 percent since 2014, in part because tight financial conditions punish duration sensitive cash flows. Selection alpha is real, but the macro window for the asset class matters too.
Respectfully, the data shows the opposite for most retail investors. Median small cap underperforms the Russell 1000 over rolling 10 year windows, and survivorship bias on those 10x winners is brutal. The ‘only you can’ framing skips over how few actually pick them.
That’s just mathematically not correct. Small- and micro caps outperform the market by a mile in general
Russell 2000 trailed Russell 1000 by roughly 300 bps annualized since 2010. The premium concentrates in profitable small caps, not the broad universe. Equal weighting changes the picture significantly.
Respectfully pushing back: only about 4 percent of stocks deliver the lifetime returns. Survivorship makes the 10x feel inevitable in hindsight, but the base rate is brutal. Process and position sizing matter more than the hunt.