Earnings Drive Money-Losing Small-Caps' Growth

Small, Small, S-M-All

SAN FRANCISCO -- For small-cap aficionados, these are the salad days -- replete with croutons, Baco-Bits and those crunchy Asian "noodles."

With a melange like that, you'd think Juliet Ellis, who oversees about $1.5 billion in small-cap funds as senior portfolio manager at Chase Global Asset Management, would be ecstatic. Except, she's not -- and it has nothing to do with the fact the Russell 2000 dipped 0.1% Wednesday as blue-chips returned to favor.

The small-cap proxy is up 17.8% year-to-date and nearly 38% since Nov. 1. That performance has led me, among others, to try to examine and explain what's behind the phenomena of stocks such as SmartServe Online (SSOL Quote), which have soared in 2000 after months (years, in some cases) of not-so-benign neglect by investors. ...