Large Cap, Mid Cap and Small Cap

A friend at Goldman Sachs quipped about the recent rally in small cap stocks in India. “Small caps are always the last leg in the bull market and the first leg in the bear market”, he professed. Conventional wisdom would tend to agree, but what about performance? I pulled the numbers for India and the graph shows two interesting points

  1. Since 2009 – in the rally that looks like should correct some time soon, small cap performance > mid cap performance > large cap performance. No real surprises here
  2. Since 2003, small and mid caps have actually risen more during bull markets compared to large caps and have fallen less during bear markets compared to the large caps. This is a touch unexpected

Please leave comments with your thoughts why this could happen.

Post Script 1: Since the great depression, US micro caps have returned twelve million percent profits. Go, beat that.

Post Script 2: This is the 100th post in this blog. You had the choice to read a thousand things on the internet. I am humbled that you chose to read me. Thank you.

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