For each year, the analysts also show how the index performed for the remainder of the year.
If you have been overweight small caps heading into 2016, the analysts conclude, it has no doubt been a tough year, but history suggests the sun will shine again. As you can see in the table, in the 10 prior years where the Russell 2000 under-performed the S&P 500 on more than 25 of the year’s first 50 trading days, small caps outperformed large caps for the remainder of the year seven out of 10 times for an average rest-of-year gain of 19.3%.
The Bespoke data shows that the Russell 2000 was positive for the remainder of the year in eight of those 10 years. The S&P 500 meanwhile, saw an average rest-of-year return of 13.7% with positive returns nine out of 10 times. If this year works out the same as these averages, it will a very welcome surprise.
This article is brought to you courtesy of Jon Markman.