Big Caps versus Small

Futures look strong this morning, and I’m running into a few appointments. Before I hop, I wanted to get you this quick chart from this morn’s WSJ:

 

Strength in multi-nationals, or defensive bend for fund managers?

Talk amongst yourselves . . . .

 

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Source:
Signs Point to Pressure on Stocks As Fed Weighs Another Rate Cut
E.S. BROWNING
WSJ, October 29, 2007; Page A1
http://online.wsj.com/article/SB119361398600174313.html

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What's been said:

Discussions found on the web:
  1. Steve C commented on Oct 29

    As if I need to remind anyone…the baton has been passed months ago. Large caps will likely outperform small caps for several years. I have no small cap ETFs long in my portfolio, in fact I’m shorting the Russell small cap value index as the weakest of the U.S. indices (small vs. large, value vs. growth).

  2. michael schumacher commented on Oct 29

    Another gap up and fade….led by the wildly optimistic SPX buyer…

    Too predictable….

    ANd here we are at Mutual fund year end and yet another market making event to bail them out on Weds.

    Ciao
    MS

  3. Andy commented on Oct 29

    Except for the credit crunch hiccup this summer (at least that’s what I’m assuming was the drop in the June-July timeframe), the two indices are actually tracking each other pretty well.

    Perhaps this is not large vs. small. Perhaps this is more about banks and real estate stocks (which are more common in the Russell 2000 than in the Dow) and the general make-up of each index.

    I could go with the broad statement that “big stocks do well later in the business cycle than small ones”, but that’s too easy……………

  4. jim commented on Oct 29

    it’s the collapsing dollar favoring these big caps. THATS IT! No collapse, no money. The dollar stops collapsing, the market stops going up.

  5. Gary commented on Oct 29

    As long as the Fed continues the rate cutting cycle precious metals should be the big beneficiary and the dollar the big loser. PM have been outperforming the general markets since the Aug. 16th bottom. PM have underperformed energy and base metals during the first phase of the commodity bull. They will most likely out perform during the second phase.

  6. Eddie commented on Oct 29

    The dollar collapsing is not the only reason the big caps are doing well. In case you missed it, there is a global boom happening, and the GEs and PGs of the world are going to participate in it regardless of where the dollar is going.

    Perhaps they’re helped by the dollar falling, but they are not reliant on the dollar falling.

  7. alexd commented on Oct 29

    As results in one area lag the money moves towards where the profits are. Growth, commodities, foreign assets.

  8. jim commented on Oct 29

    I would think that if GE was benefiting from this global boom, it would at least be up on the year in foreign $$ terms, or Gold terms or anything else terms, not down.

  9. Estragon commented on Oct 29

    Eddie,

    An important element of the global boom is that asian currencies, anchored by China, along with those of the GCC area, are going down with the USD. Take away a declining USD block and I’m not convinced you still have a global boom.

  10. justin commented on Oct 29

    This all reminds me of the old Johnny Cash song: “How Highs The Water Mama!” Or perhaps the poem, (I forget the author’s name), “Not Waving, But Drowning.”

    We are in a late, late bull market, soon to turn to bust. If one thinks that the “global boom,” is going to pull the U.S. out of the abyss, they better ask themselves how big the global monster has to be in order to tug on the rope of an 800 pound Gorrilla?

  11. dan commented on Oct 29

    How can the market continue to trade up when today’s WSJ – on page 1 – expressed the opinion that equities are going to roll over? After all, BR now has the popular press sharing his views.

  12. m3 commented on Oct 29

    “How can the market continue to trade up when today’s WSJ – on page 1 – expressed the opinion that equities are going to roll over?”

    that’s actually a contrary signal that this thing could go higher.

  13. jim commented on Oct 29

    Just look at that dollar..down 1% against the $CDN today. Down almost 25% on the year…WOW! I find it hilarious this is not a big deal to anyone.
    Market at new highs, Dollar Collapsing, Oil and Gold at new highs and fed expected to cut rates Wednsesday. Un-freakin-believable.

  14. speedlet commented on Oct 29

    It’s hell being a bear.

  15. Charles commented on Oct 29

    I’m not sure you can de-couple the US economy from the world economy. There seems to be an interdependence between Asian economies who supply each other to supply us. The subprime mess here will not dissapate into thin air either. Then there is oversupply of homes and a lot of missing home buyers too. There will be oppportunities though….

  16. Robert commented on Nov 8

    No matter what the FED does, it seems that not only will the US economy suffer, but that of China as well – Which has serious implications for the entire global economy. If they drop rates, the dollar falls, Chinese imports become more expensive, US consumers buy less from China, China’s economy suffers. If the FED raises rates, US housing (and the stock market – WHOA!) suffers, the economy suffers, and people buy less from China. Is there any way out of this?

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