Small-cap stocks are better positioned than large caps to weather the recession, according to a Russell report released today.
Based on a review of four complete U.S. recessionary periods since 1979, the best time to invest in U.S. equities, particularly small-cap stocks, was far in advance of the recessions end, and that small caps led large caps prior to the point at which the economy turned the corner, according to Russell Senior Research Analyst and report author Mary Fjelstad.
Ms. Fjelstad could not be reached for comment by press time.
Stephen Wood, senior portfolio strategist at Russell, added in a statement that small-cap stocks, on average, led large caps from 12 months to three months prior to and after the recessions bottom, as well as at the exact moment of the trough itself.
Investors who loaded up on small caps relative to large caps three to six months prior to the bottom and those who timed the bottom perfectly had, on average, the best returns, Mr. Wood said in a statement about the report.
But he also cautioned that investors looking for positive returns typical of an equity bull market should consider long-term investment goals for their strategic allocations rather than trying to time market (turning points).