FA Center: These 2 ETFs show why owning small-cap stocks is key to beating the market at times like this

by | Nov 22, 2022 | Stock Market

Small has been beautiful this year on Wall Street. That’s because the smallest-cap stocks within the S&P 500
SPX,
+1.23%
have far outperformed the largest-cap stocks since January. The eight stocks with the largest market caps at the beginning of the year—which at the time represented a top-heavy 27.2% of the total market cap of the entire index — have lost an average of 40.4% so far this year (through Nov. 21), according to FactSet. That’s more than three times the 9.5% average loss among the remaining 490+ stocks in the S&P 500.

Meta Platforms
META,
+0.99%
is the biggest year-to-date loser, down 67.3%, but it certainly isn’t the only stock bringing down the average. NVIDIA
NVDA,
+3.96%,
the 8th largest stock in the S&P 500 at the beginning of 2022, was down 47.9% through the end of October, and Amazon
AMZN,
+0.42%,
the third largest, was down 44.5%. The chart below shows how the eight largest-cap stocks in the S&P 500 at the beginning of the year have lost more than the average.

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