Russell 2000 a long-term buy and hold to outperform S&P 500

14 oct 2019

The Russell 2000 is near a support level relative to the S&P 500. As Fred Imbert of CNBC reported last week in his article "Small-cap stocks are primed to outperform large caps over the next 10 years," small caps tend to outperform large caps in the 12 months after the Fed cuts rates. With two rate cuts already this year and more likely on the way, small caps should be primed to outperform in 2020. And right now, they're cheap compared to large caps. The whole market is probably overvalued right now, given trade risks and weak earnings, but this is especially true of large caps. Buying the S&P 500 near all-time highs in the middle of an earnings recession and a trade war is just foolish. For a long-term buy and hold investment, small caps are the segment of the market to buy right now.