In the past five years, the simple formula for investing success has been to buy small-cap and value stocks. As of Nov. 30, the Russell 2000 was up 41% in the past five years vs. a 1% gain for the Dow Jones Industrial Average and losses of 9% and 23% for the S&P 500 and Nasdaq Composite, respectively. In the same period, the Wilshire Large Cap Value Index has risen 15% while its growth counterpart has fallen 11%.
The same pattern is evident in the two-year timeframe as well. But the outperformance of small-caps has shrunk in the past year while growth has started to outpace value.
To be sure, the past five years has been littered with
"Our models continue to indicate that growth stocks are a better value than value stocks, and large-caps will continue to outperform small-caps," Ed Keon of Prudential Securities commented earlier this week.Citigroup's chief U.S. equity strategist, Tobias Levkovich, who made a
Big-cap and growth stocks are coming back into favor after long-term dominance by small-cap and value
* performance through Nov. 30