The Ignorant Investor

It's become an annual thing in the small caps vs. big caps game: small caps win. By a lot. The paper reports that that small caps have outperformed the nation's big caps for the seventh time in the past eight years, and that during that time, "the small-cap Russell 2000 index is up about 81%, compared with about 7% for the Standard & Poor's 500-stock index and about 24% for the Dow Jones Industrial Average."

According to the Journal, small caps are trading 20% above their historical average price. And fund giant T. Rowe Price "calculates that small-cap stocks are trading at their highest premium to large-cap stocks since 1983."

That's been my message for a while now, and so it's not like I'm out in left field all by myself. I've been buying the S&P 500 big time over small caps on the valuation issue; ignorant investors chase returns, I thought, so I won't. As you can imagine, it's extraordinarily frustrating to make an investment for the right reasons and not see it pay off.