As the stock market pulled back from its October highs, there’s no denying that small cap stocks have been the worst place to be invested. The Russell 2000 lost roughly 7.2 percent in the month of November, compared to the S&P 500 return of negative 4.2 percent. Increasing worries of the slowdown of the U.S. economy, which could possibly lead to a recession, has pushed many investors into more solid large cap companies.
The first week of December has been a breath of fresh air for the market, and especially small-caps. As new economic data comes in, many pundits are starting to re-evaluate the possibility of escaping a recession. If this turns out to be the case, small-caps could get quite a boost, and could possibly outpace the much loved large cap arena.
A few ETF’s that are ideal for a small-cap bet would be iShares S&P SmallCap 600 Index fund (IJR), Vanguard Small Cap Index (VB), or iShares R2000 Index (IWM). For even more leverage you can look to the ProShares Ultra S&P SmallCap 600 (SAA) which returns twice the daily move for the S&P Small Cap 600.
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