The Small-Cap Surge

I said that one of the effects of the Fed’s QE2 program is that it would cause investors to favor riskier assets. For example, they would favor stocks over bonds; and within stocks, they would favor riskier sectors like small-caps.

On Friday, the S&P Small-Cap 600 ($SML) broke 450 for the first time ever. In July 2007, the index reach an all-time intra-day high of 445.82.

The Russell 2000 ($RUT) broke above 850 which is just shy of its July 2007 high of 856.48. If the Nasdaq had kept pace with the Russell 2000, it would be over 7,300 today.

Posted by on April 4th, 2011 at 10:42 am


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